The Dynamics of Inequality Change in a Highly Dualistic Economy: Honduras, 1991.2007
AbstractWe examine the drivers of inequality change in Honduras between 1991-2007, trying to understand why inequality increased in Honduras until 2005, while it was falling in most other Latin American countries. Using annual household surveys, we document first rising inequality between 1991-2005, which is followed by falling inequality thereafter. Using an inequality decomposition technique, we show that the rising inequality between 1991 and 2005 was, for the most part, driven by the dispersion of labour incomes in rural areas. We also show that the extraordinary labour earnings disequalization is mainly the result of a widening wage gap between the tradable and non-tradable sectors and occupations, combined with highly segmented labour markets and poor overall educational progress. The underlying determinants of the divergencebetween tradable and non-tradable sectors were highly overvalued currencies and poor commodity process for Honduras. agricultural exports. Between 2005 and 2007, however, the inequality reduction was a result of equalizing trends in labour and non-labour incomes. The commodity boom promoting the tradable sector and remittances (in this order) played a significant role here, with government transfers playing a small supporting role. Since the decline in inequality is largely driven by international factors, we cannot be sure whether the decline in inequality will continue.
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Bibliographic InfoPaper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Paper Series with number UNU-WIDER Research Paper WP2012/17.
Date of creation: 2012
Date of revision:
inequality; decomposition; education; wages; Honduras; migration;
Other versions of this item:
- Stephan Klasen & Thomas Otter & Carlos Villalobos Barría, 2012. "The dynamics of inequality change in a highly dualistic economy: Honduras, 1991-2007," Ibero America Institute for Econ. Research (IAI) Discussion Papers 215, Ibero-America Institute for Economic Research.
- C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
- J - Labor and Demographic Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-04-10 (All new papers)
- NEP-DEV-2012-04-10 (Development)
- NEP-IUE-2012-04-10 (Informal & Underground Economics)
- NEP-LAB-2012-04-10 (Labour Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- The dynamics of inequality change in a highly dualistic economy: Honduras, 1991-2007
by Maximo Rossi in Wikiprogress América Latina on 2012-03-12 13:43:00
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