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Is the Decline in Inequality in Latin America Here to Stay?

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  • Miguel Sz�kely
  • Pamela Mendoza

Abstract

The 2000s decade represented a turning point in the increasing inequality trend that had been observed in Latin America during the second half of the twentieth century. This paper offers an analysis of the association between these shifts and short-, medium- and long-term factors. For our exploration we assemble a database on income distribution indicators systematically calculated directly from household surveys with emphasis on within-country consistency, methodology, definitions and coverage for the 1980-2013 years. This database allows observing clearly that the increases in inequality throughout the 1980s and 1990s decades have been counteracted by the improvements in the 2000s and the initial years of the 2010 decades. From our econometric exploration we find that (a) while there are short-term forces that are associated with underlying improvements in the distribution--including human capital accumulation and declines in the population dependency rate, (b) medium-term factors that could have been inequality-increasing in the past ameliorated their effect in the 2000s years--namely, the effect of the trade reforms of the 1980s which faded away toward the end of the past century and (c) there are two short-term forces that might have played an important progressive role during the 2000s years, but that could shift in the opposite direction in the near future--namely, the improvement in terms of trade and the declining returns to schooling. Thus, we conclude that the improvement in income distribution in the region could be only a temporary phenomenon.

Suggested Citation

  • Miguel Sz�kely & Pamela Mendoza, 2015. "Is the Decline in Inequality in Latin America Here to Stay?," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 16(3), pages 397-419, August.
  • Handle: RePEc:taf:jhudca:v:16:y:2015:i:3:p:397-419
    DOI: 10.1080/19452829.2015.1050320
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    References listed on IDEAS

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    1. Lora, Eduardo, 2001. "Structural Reforms in Latin America: What Has Been Reformed and How to Measure It," IDB Publications (Working Papers) 3338, Inter-American Development Bank.
    2. Eduardo Lora, 2001. "Structural Reforms in Latin America: What Has Been Reformed and How to Measure It," Research Department Publications 4293, Inter-American Development Bank, Research Department.
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    Cited by:

    1. 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.
    2. Rodriguez Castelan,Carlos & Lopez-Calva,Luis-Felipe & Lustig,Nora & Valderrama,Daniel, 2016. "Understanding the dynamics of labor income inequality in Latin America," Policy Research Working Paper Series 7795, The World Bank.
    3. Fernández, Manuel & Messina, Julián, 2018. "Skill premium, labor supply, and changes in the structure of wages in Latin America," Journal of Development Economics, Elsevier, vol. 135(C), pages 555-573.
    4. Brenes, Esteban R. & Ciravegna, Luciano & Acuña, Joseph, 2020. "Differentiation strategies in agribusiness – A configurational approach," Journal of Business Research, Elsevier, vol. 119(C), pages 522-539.
    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. Leopoldo Tornarolli & Matías Ciaschi & Luciana Galeano, 2018. "Income Distribution in Latin America. The Evolution in the Last 20 Years: A Global Approach," CEDLAS, Working Papers 0234, CEDLAS, Universidad Nacional de La Plata.
    7. García Muñoz, Teresa María & Milgram Baleix, Juliette & Odeh, Omar Odeh, 2020. "Inequality in Latin America: The role of the nature of trade and partners," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 14, pages 1-35.
    8. repec:idq:ictduk:12799 is not listed on IDEAS
    9. Colacce, Maira & Amarante, Verónica, 2018. "More unequal or less? A review of global, regional and national income inequality," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.

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