IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Income Distribution In Chile, 1987-2006: Analysis And Policy Considerations

  • Andrés Solimano
  • Arístides Torche
Registered author(s):

    The Chilean Economy has experienced substantial changes in last quarter century: The GDP per capita almost duplicated, inflation dropped significantly and real wages improved substantially. The economy opened to international trade and markets were liberalized and diversified. However, income concentration, as measured by the Gini coefficient, has remained extremely high at about 55%. Based on the large and nation-wide representative CASEN survey, this paper studies trends in income distribution in Chile between 1987 and 2006 at both the household and the individual level. The paper analyses ten stylized facts such as the high and persistent income concentration, the substantial impact of the wealthiest percentiles on the income distribution and the high variability of income distribution across regions. The study finds that inequality may have declined from 2003 to 2006. Finally, the paper presents a statistical model accounting for inequality at the regional level. The model suggests that the association between economic activity at the regional level and inequality follows an inverted-U shape consistent with the Kuznets curve. It also suggests that growing educational attainment contributes to reducing inequality but other demographic factors (urbanization, reduction of household size) may have the opposite effect, resulting in a stable Gini coefficient over time.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www.bcentral.cl/estudios/documentos-trabajo/pdf/dtbc480.pdf
    Download Restriction: no

    Paper provided by Central Bank of Chile in its series Working Papers Central Bank of Chile with number 480.

    as
    in new window

    Length:
    Date of creation: Aug 2008
    Date of revision:
    Handle: RePEc:chb:bcchwp:480
    Contact details of provider: Postal: Casilla No967, Santiago
    Phone: (562) 670 2000
    Fax: (562) 698 4847
    Web page: http://www.bcentral.cl/
    More information through EDIRC

    References listed on IDEAS
    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.:

    as in new window
    1. Persson, T. & Tabellini, G., 1993. "Is Inequality Harmful for Growth," Papers 537, Stockholm - International Economic Studies.
    2. Raimundo Soto & Arístides Torche, 2004. "Spatial Inequality, Migration, and Economic Growth in Chile," Documentos de Trabajo 274, Instituto de Economia. Pontificia Universidad Católica de Chile..
    3. Rómulo A.Chumacero & Ricardo D.Paredes, 2005. "Characterizing income distribution for poverty and inequality analysis," Estudios de Economia, University of Chile, Department of Economics, vol. 32(1 Year 20), pages 97-117, June.
    4. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
    5. Klaus Deininger & Lyn Squire, 1996. "A New Data Set Measuring Income Inequality," CEMA Working Papers 512, China Economics and Management Academy, Central University of Finance and Economics.
    6. Banerjee, Abhijit V & Newman, Andrew F, 1993. "Occupational Choice and the Process of Development," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 274-98, April.
    7. Fields, Gary S & Yoo, Gyeongjoon, 2000. "Falling Labor Income Inequality in Korea's Economic Growth: Patterns and Underlying Causes," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(2), pages 139-59, June.
    8. Hongyi Li & Lyn Squire & Heng-fu Zou, 1998. "Explaining International and Intertemporal Variations in Income Inequality," CEMA Working Papers 73, China Economics and Management Academy, Central University of Finance and Economics.
    9. Claudio Sapelli, 2005. "Returns to Schooling and Income Distribution by Cohort in Chile: An Analysis Based on Synthetic Panel Data," Documentos de Trabajo 290, Instituto de Economia. Pontificia Universidad Católica de Chile..
    10. Claudio Soto G., 2004. "Desempleo y Consumo en Chile," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 7(1), pages 31-50, April.
    11. repec:chb:bcchwp:08 is not listed on IDEAS
    12. Dani Rodrik, 1998. "Where Did All The Growth Go? External Shocks, Social Conflict, and Growth Collapses," NBER Working Papers 6350, National Bureau of Economic Research, Inc.
    13. Engel, Eduardo M. R. A. & Galetovic, Alexander & Raddatz, Claudio E., 1999. "Taxes and income distribution in Chile: some unpleasant redistributive arithmetic," Journal of Development Economics, Elsevier, vol. 59(1), pages 155-192, June.
    14. Schmidt-Hebbel, Klaus & Serven, Luis, 2000. "Does income inequality raise aggregate saving?," Journal of Development Economics, Elsevier, vol. 61(2), pages 417-446, April.
    15. Arístides Torche & Gert Wagner, 1997. "Previsión Social: Valoración Individual de un Beneficio Mandatado," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 34(103), pages 363-390.
    16. repec:ebl:ecbull:v:4:y:2003:i:7:p:1-6 is not listed on IDEAS
    17. Ferreira, Francisco H G & Litchfield, Julie A, 1999. "Calm after the Storms: Income Distribution and Welfare in Chile, 1987-94," World Bank Economic Review, World Bank Group, vol. 13(3), pages 509-38, September.
    18. Javier Núñez & Cristina Risco, 2004. "Movilidad intergeneracional del ingreso en un país en desarrollo: El caso de Chile," Working Papers wp210, University of Chile, Department of Economics.
    19. Mitra, Pradeep & Yemtsov, Ruslan, 2006. "Increasing inequality in transition economies : is there more to come?," Policy Research Working Paper Series 4007, The World Bank.
    20. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66, pages 281.
    21. Mussard Stéphane & Terraza Michel & Seyte Françoise, 2003. "Decomposition of Gini and the generalized entropy inequality measures," Economics Bulletin, AccessEcon, vol. 4(3), pages 1-5.
    22. Abhijit V. Banerjee & Esther Duflo, 2000. "Inequality and Growth: What Can the Data Say?," NBER Working Papers 7793, National Bureau of Economic Research, Inc.
    23. Leonardo Gasparini & Mariana Marchionni & Walter Sosa Escudero, 2000. "Characterization of inequality changes through microeconometric decompositions. The case of Greater Buenos Aires," Department of Economics, Working Papers 025, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata.
    24. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
    25. Kristin J. Forbes, 2000. "A Reassessment of the Relationship between Inequality and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 869-887, September.
    26. Dagum, Camilo, 1987. "Measuring the Economic Affluence between Populations of Income Receivers," Journal of Business & Economic Statistics, American Statistical Association, vol. 5(1), pages 5-12, January.
    27. Hongyi Li & Lyn Squire & Tao Zhang & Heng-fu Zou, 1999. "A Data Set on Income Distribution," CEMA Working Papers 575, China Economics and Management Academy, Central University of Finance and Economics.
    28. John Ermisch & Marco Francesconi & Thomas Siedler, 2006. "Intergenerational Mobility and Marital Sorting," Economic Journal, Royal Economic Society, vol. 116(513), pages 659-679, 07.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:chb:bcchwp:480. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Claudio Sepulveda)

    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 references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.