IDEAS home Printed from https://ideas.repec.org/p/unu/wpaper/wp-2016-106.html
   My bibliography  Save this paper

Vertical and horizontal inequality in Ecuador: The lack of sustainability

Author

Listed:
  • Iván Gachet
  • Diego F. Grijalva
  • Paúl Ponce
  • Damián Rodríguez

Abstract

We analyse vertical and horizontal inequality in Ecuador from a long-run perspective, as well as during and after the commodities boom. Using various data sources we show that Ecuador has made significant progress in reducing inequality, particularly since 2000. However, inequality has started to increase again starting in 2015. We provide preliminary evidence that the trend reversal is consistent with Ecuador's dependency on oil revenues. Once the commodities boom ended, government policies aimed at reducing inequality turned out to be unsustainable and inequality started to rise again.

Suggested Citation

  • Iván Gachet & Diego F. Grijalva & Paúl Ponce & Damián Rodríguez, 2016. "Vertical and horizontal inequality in Ecuador: The lack of sustainability," WIDER Working Paper Series wp-2016-106, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2016-106
    as

    Download full text from publisher

    File URL: https://www.wider.unu.edu/sites/default/files/wp2016-106.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Alesina, Alberto & Baqir, Reza & Easterly, William, 2000. "Redistributive Public Employment," Journal of Urban Economics, Elsevier, vol. 48(2), pages 219-241, September.
    2. International Monetary Fund, 2016. "Portugal: 2016 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Portugal," IMF Staff Country Reports 2016/300, International Monetary Fund.
    3. Loayza, Norman & Rigolini, Jamele, 2016. "The Local Impact of Mining on Poverty and Inequality: Evidence from the Commodity Boom in Peru," World Development, Elsevier, vol. 84(C), pages 219-234.
    4. Howie, Peter & Atakhanova, Zauresh, 2014. "Resource boom and inequality: Kazakhstan as a case study," Resources Policy, Elsevier, vol. 39(C), pages 71-79.
    5. Acemoglu, Daron & Johnson, Simon & Robinson, James & Thaicharoen, Yunyong, 2003. "Institutional causes, macroeconomic symptoms: volatility, crises and growth," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 49-123, January.
    6. Feres, Juan Carlos & Mancero, Xavier, 2000. "El método de las necesidades básicas insatisfechas (NBI) y sus aplicaciones en América Latina," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 31527, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    7. Cornia, Giovanni Andrea (ed.), 2014. "Falling Inequality in Latin America: Policy Changes and Lessons," OUP Catalogue, Oxford University Press, number 9780198701804.
    8. Leonardo Gasparini & Nora Lustig, 2011. "The Rise and Fall of Income Inequality in Latin America," Working Papers 1110, Tulane University, Department of Economics.
    9. Acemoglu, Daron & Johnson, Simon & Robinson, James A., 2005. "Institutions as a Fundamental Cause of Long-Run Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 6, pages 385-472, Elsevier.
    10. Deininger, Klaus & Squire, Lyn, 1996. "A New Data Set Measuring Income Inequality," The World Bank Economic Review, World Bank, vol. 10(3), pages 565-591, September.
    11. Gachet, Ivan & Maldonado, Diego & Oliva, Nicolas & Ramirez, Jose, 2011. "Hechos Estilizados de la Economía Ecuatoriana: El Ciclo Económico 1965-2008 [Stylized Facts of the Ecuadorian Economy: The Economic Chicle 1965-2008]," MPRA Paper 30280, University Library of Munich, Germany.
    12. Nancy Birdsall & Nora Lustig & Darryl McLeod, 2011. "Declining Inequality in Latin America: Some Economics, Some Politics," Working Papers 1120, Tulane University, Department of Economics.
    13. Acosta, Pablo & Calderon, Cesar & Fajnzylber, Pablo & Lopez, Humberto, 2008. "What is the Impact of International Remittances on Poverty and Inequality in Latin America?," World Development, Elsevier, vol. 36(1), pages 89-114, January.
    14. Lustig, Nora & Lopez-Calva, Luis F. & Ortiz-Juarez, Eduardo, 2013. "Declining Inequality in Latin America in the 2000s: The Cases of Argentina, Brazil, and Mexico," World Development, Elsevier, vol. 44(C), pages 129-141.
    15. Deininger, Klaus & Squire, Lyn, 1996. "A New Data Set Measuring Income Inequality," The World Bank Economic Review, World Bank, vol. 10(3), pages 565-591, September.
    16. Benedikt Goderis & Samuel W. Malone, 2011. "Natural Resource Booms and Inequality: Theory and Evidence," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113(2), pages 388-417, June.
    17. James A. Robinson, 2006. "Equity, Institutions and the Development Process," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 32, pages 17-50.
    18. Cecchini, Simone & Madariaga, Aldo, 2011. "Programas de transferencias condicionadas: balance de la experiencia reciente en América Latina y el Caribe," Cuadernos de la CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 27854 edited by Cepal, September.
    19. Hyun Son, 2003. "A New Poverty Decomposition," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 1(2), pages 181-187, August.
    20. Lerman, Robert I & Yitzhaki, Shlomo, 1985. "Income Inequality Effects by Income," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 151-156, February.
    21. George Psacharopoulos & Samuel Morley & Ariel Fiszbein & Haeduck Lee & William C. Wood, 1995. "POVERTY AND INCOME INEQUALITY IN LATIN AMERICA DURING THE 1980s," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 41(3), pages 245-264, September.
    22. Fearon, James D, 2003. "Ethnic and Cultural Diversity by Country," Journal of Economic Growth, Springer, vol. 8(2), pages 195-222, June.
    23. Tullio Buccellato & Tomasz Mickiewicz, 2009. "Oil and Gas: A Blessing for the Few. Hydrocarbons and Inequality within Regions in Russia," Europe-Asia Studies, Taylor & Francis Journals, vol. 61(3), pages 385-407.
    24. Aldunate, Eduardo & Martner Fanta, Ricardo, 2006. "Fiscal policy and social protection," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    25. Ravallion, Martin & Chen, Shaohua, 1997. "What Can New Survey Data Tell Us about Recent Changes in Distribution and Poverty?," The World Bank Economic Review, World Bank, vol. 11(2), pages 357-382, May.
    26. Alejandro Lopez-Feldman, 2006. "Decomposing inequality and obtaining marginal effects," Stata Journal, StataCorp LP, vol. 6(1), pages 106-111, March.
    27. Philippe Aghion, 2005. "Growth and Institutions," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 32(1), pages 3-18, March.
    28. World Bank, 2017. "World Development Indicators 2017," World Bank Publications - Books, The World Bank Group, number 26447, December.
    29. International Monetary Fund, 2016. "Ecuador: Purchase Under the Rapid Financing Instrument-Press Release; Staff Report; and Statement by the Executive Director for Ecuador," IMF Staff Country Reports 2016/288, International Monetary Fund.
    30. Gabriel X. Martinez, 2006. "The political economy of the Ecuadorian financial crisis," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 30(4), pages 567-585, July.
    31. Leonardo Gasparini & Guillermo Cruces & Leopoldo Tornarolli, 2016. "Chronicle of a Deceleration Foretold: Income inequality in Latin America in the 2010s," CEDLAS, Working Papers 0198, CEDLAS, Universidad Nacional de La Plata.
    32. Pedro Romero & Fergus Hodgson & María Paz Gómez, 2018. "Liberalism in Ecuador," Econ Journal Watch, Econ Journal Watch, vol. 15(1), pages 105–128-1, January.
    33. Diego F. Grijalva, 2017. "The rise of the middle class in Ecuador during the oil boom," Revista Cuadernos de Economia, Universidad Nacional de Colombia, FCE, CID, vol. 36(72), October.
    34. Nancy Birdsall, Nora Lustig, and Darryl McLeod, 2011. "Declining Inequality in Latin America: Some Economics, Some Politics - Working Paper 251," Working Papers 251, Center for Global Development.
    35. Francois Bourguignon, 2004. "The Poverty-growth-inequality triangle," Indian Council for Research on International Economic Relations, New Delhi Working Papers 125, Indian Council for Research on International Economic Relations, New Delhi, India.
    36. Daron Acemoglu & James A. Robinson, 2006. "De Facto Political Power and Institutional Persistence," American Economic Review, American Economic Association, vol. 96(2), pages 325-330, May.
    37. Ms. Evridiki Tsounta & Anayochukwu Osueke, 2014. "What is Behind Latin America’s Declining Income Inequality?," IMF Working Papers 2014/124, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Oscar Zapata, 2023. "Weather Disasters, Material Losses and Income Inequality: Evidence from a Tropical, Middle-Income Country," Economics of Disasters and Climate Change, Springer, vol. 7(2), pages 231-251, July.
    2. Fabio Andrés Díaz Pabón & María Gabriela Palacio Ludeña, 2021. "Inequality and the Socioeconomic Dimensions of Mobility in Protests: The Cases of Quito and Santiago," Global Policy, London School of Economics and Political Science, vol. 12(S2), pages 78-90, April.
    3. Carla Canelas & Rachel M. Gisselquist, 2019. "Horizontal Inequality and Data Challenges," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 143(1), pages 157-172, May.
    4. Diego F. Grijalva, 2017. "The rise of the middle class in Ecuador during the oil boom," Revista Cuadernos de Economia, Universidad Nacional de Colombia, FCE, CID, vol. 36(72), October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ivan Gachet & Diego F. Grijalva & Paúl A. Ponce & Damián Rodríguez, 2019. "Vertical and Horizontal Inequality in Ecuador: The Lack of Sustainability," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 145(3), pages 861-900, October.
    2. Thomas Gall & Paolo Masella, 2012. "Markets and jungles," Journal of Economic Growth, Springer, vol. 17(2), pages 103-141, June.
    3. Manuel Fernández & Gabriela Serrano, 2022. "New Perspectives on Inequality in Latin America," Documentos CEDE 20295, Universidad de los Andes, Facultad de Economía, CEDE.
    4. Kim, Dong-Hyeon & Chen, Ting-Cih & Lin, Shu-Chin, 2020. "Does oil drive income inequality? New panel evidence," Structural Change and Economic Dynamics, Elsevier, vol. 55(C), pages 137-152.
    5. Oyamada, Kazuhiko & Uchida, Yoko, 2011. "Production patterns of Multinational Firms: Horizontal and Vertical Multinationals with traded intermediates," Conference papers 332063, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    6. Anderson, Edward, 2022. "The correlates of declining income inequality among emerging and developing economies during the 2000s," World Development, Elsevier, vol. 152(C).
    7. Robert P. Inman, 2008. "Federalism's Values and the Value of Federalism," NBER Working Papers 13735, National Bureau of Economic Research, Inc.
    8. Desire Avom & Fabrizio Carmignani & Abdour Chowdhury, "undated". "Four Scenarios of Poverty Reduction and the Role of Economic Policy," MRG Discussion Paper Series 3109, School of Economics, University of Queensland, Australia.
    9. Berg, Andrew & Ostry, Jonathan D. & Zettelmeyer, Jeromin, 2012. "What makes growth sustained?," Journal of Development Economics, Elsevier, vol. 98(2), pages 149-166.
    10. Araujo, Jair Andrade & Marinho, Emerson & Campêlo, Guaracyane Lima, 2017. "Economic growth and income concentration and their effects on poverty in Brazil," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    11. Ayal Kimhi, 2004. "Growth, Inequality and Labor Markets in LDCs: A Survey," CESifo Working Paper Series 1281, CESifo.
    12. Mustafa, Ghulam & Rizov, Marian & Kernohan, David, 2017. "Growth, human development, and trade: The Asian experience," Economic Modelling, Elsevier, vol. 61(C), pages 93-101.
    13. Gravier-Rymaszewska, Joanna & Tyrowicz, Joanna & Kochanowicz, Jacek, 2010. "Intra-provincial inequalities and economic growth in China," Economic Systems, Elsevier, vol. 34(3), pages 237-258, September.
    14. Ali Sarkhosh-Sara & Khadije Nasrollahi & Karim Azarbayjani & Rasul Bakhshi Dastjerdi, 2020. "Comparative analysis of the effects of institutional factors and Piketty’s Hypothesis on inequality: evidence from a panel of countries," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 9(1), pages 1-28, December.
    15. Carlos Rodriguez-Castelan & Luis F. Lopez-Calva & Nora Lustig & Daniel Valderrama, 2016. "Understanding the Dynamics of Labor Income Inequality in Latin America," Working Papers 1608, Tulane University, Department of Economics.
    16. Gundlach, Erich & Paldam, Martin, 2009. "A farewell to critical junctures: Sorting out long-run causality of income and democracy," European Journal of Political Economy, Elsevier, vol. 25(3), pages 340-354, September.
    17. Farzanegan, Mohammad Reza & Thum, Marcel, 2017. "More oil, less quality of education? New empirical evidence," CEPIE Working Papers 09/17, Technische Universität Dresden, Center of Public and International Economics (CEPIE).
    18. Camille Laville, 2018. "The econometrical causal analysis of internal conflicts: The evolutions of a growing literature [L’analyse économétrique des conflits internes par l’approche causale : les évolutions d’une littérat," Working Papers hal-01940461, HAL.
    19. Fogel, Kathy & Morck, Randall & Yeung, Bernard, 2008. "Big business stability and economic growth: Is what's good for General Motors good for America?," Journal of Financial Economics, Elsevier, vol. 89(1), pages 83-108, July.
    20. Hassine, Nadia Belhaj, 2015. "Economic Inequality in the Arab Region," World Development, Elsevier, vol. 66(C), pages 532-556.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:unu:wpaper:wp-2016-106. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Siméon Rapin (email available below). General contact details of provider: https://edirc.repec.org/data/widerfi.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.