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Inequality Stagnation in Latin America in the Aftermath of the Global Financial Crisis

Author

Listed:
  • Louise Cord
  • Oscar Barriga†Cabanillas
  • Leonardo Lucchetti
  • Carlos Rodríguez†Castelán
  • Liliana D. Sousa
  • Daniel Valderrama

Abstract

Between 2003 and 2010, Latin America experienced a solid record of economic growth, coupled with a notable reduction in income inequality. The regional Gini coefficient fell from 0.556 to 0.521 and declined in all 15 out of 17 countries in which frequent data are available. However, previous studies have warned about problems in the sustainability of the decline in income inequality and this study presents evidence of stagnation on this front between 2010 and 2013. The results are robust to various measures of income inequality, but differ across the region. While largely attributable to the recovery from the global financial crisis in Mexico and some countries in Central America, the results are also supported by the demonstrated slowdown in inequality reduction in other countries, including Brazil, Ecuador and Bolivia.

Suggested Citation

  • Louise Cord & Oscar Barriga†Cabanillas & Leonardo Lucchetti & Carlos Rodríguez†Castelán & Liliana D. Sousa & Daniel Valderrama, 2017. "Inequality Stagnation in Latin America in the Aftermath of the Global Financial Crisis," Review of Development Economics, Wiley Blackwell, vol. 21(1), pages 157-181, February.
    • Handle: RePEc:bla:rdevec:v:21:y:2017:i:1:p:157-181
    DOI: 10.1111/rode.12260
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    Cited by:

    1. Gasparini, Leonardo & Galiani, Sebastian & Cruces, Guillermo & Acosta, Pablo A., 2011. "Educational Upgrading and Returns to Skills in Latin America: Evidence from a Supply-Demand Framework, 1990-2010," IZA Discussion Papers 6244, Institute of Labor Economics (IZA).
    2. 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.
    3. Olivier Bargain & H. Xavier Jara & David Rodriguez, 2017. "Learning from your neighbor: tax-benefit systems swaps in Latin America," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 15(4), pages 369-392, December.
    4. Bruno Martorano, 2018. "Taxation and Inequality in Developing Countries: Lessons from the Recent Experience of Latin America," Journal of International Development, John Wiley & Sons, Ltd., vol. 30(2), pages 256-273, March.
    5. Bruno Martorano, 2018. "Taxation and Inequality in Developing Countries: Lessons from the Recent Experience of Latin America," Journal of International Development, John Wiley & Sons, Ltd., vol. 30(2), pages 256-273, March.
    6. Manuel Fernández & Gabriela Serrano, 2022. "New Perspectives on Inequality in Latin America," Documentos CEDE 20295, Universidad de los Andes, Facultad de Economía, CEDE.
    7. Pablo Acosta & Guillermo Cruces & Sebastian Galiani & Leonardo Gasparini, 2019. "Educational upgrading and returns to skills in Latin America: evidence from a supply–demand framework," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 28(1), pages 1-20, December.
    8. Bruno Martorano, 2018. "Taxation and Inequality in Developing Countries: Lessons from the Recent Experience of Latin America," Journal of International Development, John Wiley & Sons, Ltd., vol. 30(2), pages 256-273, March.
    9. Gérman Feierherd & Patricio Larroulet & Wei Long & Nora Lustig, 2021. "The Pink Tide and Inequality in Latin America," Commitment to Equity (CEQ) Working Paper Series 105, Tulane University, Department of Economics.
    10. Juan Guerra-Salas, 2016. "Fiscal Policy, Sectoral Allocation, and the Skill Premium: Explaining the Decline in Latin America’s Income Inequality," Working Papers Central Bank of Chile 779, Central Bank of Chile.
    11. Anderson, Edward, 2022. "The correlates of declining income inequality among emerging and developing economies during the 2000s," World Development, Elsevier, vol. 152(C).
    12. Jorge Garza-Rodriguez & Gustavo A. Ayala-Diaz & Gerardo G. Coronado-Saucedo & Eugenio G. Garza-Garza & Oscar Ovando-Martinez, 2021. "Determinants of Poverty in Mexico: A Quantile Regression Analysis," Economies, MDPI, vol. 9(2), pages 1-24, April.
    13. Oscar Molina Tejerina & Luis Castro Peñarrieta, 2020. "Unexplained Wage Gaps in the Tradable and Nontradable Sectors: Cross-Sectional Evidence by Gender in Bolivia," Investigación & Desarrollo 0120, Universidad Privada Boliviana, revised Nov 2020.
    14. Sinem Sefil-Tansever, 2017. "Income Distribution in Turkey during the Global Financial Crisis," Research in Applied Economics, Macrothink Institute, vol. 9(3), pages 91-107, September.
    15. Branko Milanovic, 2022. "After the Financial Crisis: The Evolution of the Global Income Distribution Between 2008 and 2013," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 68(1), pages 43-73, March.
    16. Pessino, Carola & Izquierdo, Alejandro & Vuletin, Guillermo, 2018. "Better Spending for Better Lives: How Latin America and the Caribbean Can Do More with Less," IDB Publications (Books), Inter-American Development Bank, number 9152.
    17. 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.
    18. Leopoldo TORNAROLLI & Matías CIASCHI & Luciana GALEANO, 2018. "Income Distribution in Latin America. The Evolution in the Last 20 Years: A Global Approach," Working Paper 0b1f0e35-82be-4853-8fac-2, Agence française de développement.
    19. López-Calva, Luis Felipe & Levy Algazi, Santiago, 2016. "Labor Earnings, Misallocation, and the Returns to Education in Mexico," IDB Publications (Working Papers) 7454, Inter-American Development Bank.
    20. Julian Messina & Joana Silva, 2018. "Wage Inequality in Latin America," World Bank Publications - Books, The World Bank Group, number 28682, December.

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