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La desigualdad del ingreso en Uruguay entre 1986 y 2009

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Author Info

  • Guillermo Alves

    ()
    (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)

  • Verónica Amarante

    ()
    (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)

  • Gonzalo Salas

    ()
    (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)

  • Andrea Vigorito

    ()
    (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)

Abstract

The purpose of this study is to analyze the evolution of income inequality in Uruguay in 1986-2009 and its main driving forces. During 1986-1994 inequality remained almost unchanged, whearas it grew in 1994-2007 and startd to fall in 2007-2009. We carry out an inequality decomposition by income source which shows that the evolution of earning inequality and the inception of non contributory public transfers are the main explanatory factors of the evolution of inequality across the whole period. The inception of income transfer schemes, targeted towards the first income quintile contribute to explain the recent descent in inequality. In order to single out the main factors explaining the evolution of earnings inequality we carried out a micro simulation exercise. Results show that increasing returns to education were the main factor underlying this evolution. The recent decrease in inequality is also associated to the decrease in skill premia. At the same time, increasing employment rates and the reduction of the regional gap also had an equalizing effect. Meanwhile the scarce contribution of schooling in general and, specifically, in the recent descent in inequality poses a challenge for the design of educational policies. Our study also suggests that most of the recent reduction in inequality is related to the recent redistributive reforms such as increasing the value of minimum wages, centralized wage-setting mechanisms and the income tax. It is still too soon to assess whether this recent movement is a permanent trend. The analysis was based in the Uruguayan Household Surveys (Encuestas Continuas de Hogares) carried out by Instituto Nacional de Estadística.

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Bibliographic Info

Paper provided by Instituto de Economia - IECON in its series Documentos de Trabajo (working papers) with number 12-03.

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Length: 46 pages
Date of creation: Feb 2012
Date of revision:
Handle: RePEc:ulr:wpaper:dt-03-12

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Keywords: Income inequality; Labor market; Returs to education; Transfers; Uruguay;

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References

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  1. Bourguignon, Francois & Fournier, M & Gurgand, M, 2001. "Fast Development with a Stable Income Distribution: Taiwan, 1979-94," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(2), pages 139-63, June.
  2. Thomas Lemieux, 2002. "Decomposing changes in wage distributions: a unified approach," Canadian Journal of Economics, Canadian Economics Association, vol. 35(4), pages 646-688, November.
  3. Creedy, John & Duncan, Alan, 2002. " Behavioural Microsimulation with Labour Supply Responses," Journal of Economic Surveys, Wiley Blackwell, vol. 16(1), pages 1-39, February.
  4. Guillermo Alves & Rodrigo Arim & Gonzalo Salas & Andrea Vigorito, 2009. "Desigualdad salarial en uruguay, 1981-207," Documentos de Trabajo (working papers) 09-05, Instituto de Economia - IECON.
  5. Carlos Casacuberta & Marcel Vaillant, 2002. "Trade and wages in Uruguay in the 1990’s," Documentos de Trabajo (working papers) 0902, Department of Economics - dECON.
  6. Ravallion, Martin & Shaohua Chen, 2001. "Measuring pro-poor growth," Policy Research Working Paper Series 2666, The World Bank.
  7. Leonardo Gasparini & Guillermo Cruces & Leopoldo Tornarolli & Mariana Marchionni, 2009. "A Turning Point? Recent Developments on Inequality in Latin America and the Caribbean," CEDLAS, Working Papers 0081, CEDLAS, Universidad Nacional de La Plata.
  8. Guillermo Alves & Verónica Amarante & Gonzalo Salas & Andrea Vigorito, 2012. "La desigualdad del ingreso en Uruguay entre 1986 y 2009," Documentos de Trabajo (working papers) 12-03, Instituto de Economia - IECON.
  9. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June.
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Citations

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Cited by:
  1. Marcelo Bergolo & Fedora Carbajal, 2010. "Exploring the Urban-Rural Labor Income Gap in Uruguay: A Quantile Regression Decomposition," Revista de Analisis Economico – Economic Analysis Review, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines, vol. 25(2), pages 133-168, Diciembre.
  2. Amarante, Veronica & Vigorito, Andrea, 2011. "Uruguayâ..s Income Inequality and Political Regimes during 1981â..2010," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  3. Guillermo Alves & Verónica Amarante & Gonzalo Salas & Andrea Vigorito, 2012. "La desigualdad del ingreso en Uruguay entre 1986 y 2009," Documentos de Trabajo (working papers) 12-03, Instituto de Economia - IECON.
  4. Veronica Amarante & Mery Ferrando & Andrea Vigorito, 2011. "School Attendance, Child Labor and Cash Transfers. An Impact Evaluation of PANES," Working Papers PIERI 2011-22, PEP-PIERI.

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