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Income Distribution under Latin America’s New Left Regimes

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Abstract

This paper reviews the decline in income inequality that has taken place over 2002-2007 in most Latin American countries against the background of its steady increase over 1980-2002. The paper analyzes then the factors that could explain this trend reversal. It focuses in particular on favorable external conditions, cyclical factors, improvements in the distribution of educational achievements and the subsequent drop in skill-premium, and changes in macroeconomic and social policies introduced in several countries, particularly by a growing number of left-of-centre governments which have come to power during the last decade. An econometric test for the years 1990-2007 indicate that, in addition to a favorable business cycle and external conditions, a decline in skill premium and the new policy model of fiscally prudent social-democracy which is emerging this decade in much of Latin America impacted favorably the distribution of income. If this approach will survive the current crisis, much of the recent inequality decline is likely to become permanent.

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  • Giovanni Andrea cornia, 2009. "Income Distribution under Latin America’s New Left Regimes," Working Papers - Economics wp2009_16.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
  • Handle: RePEc:frz:wpaper:wp2009_16.rdf
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    1. Stephan Klasen & Felicitas Nowak-Lehmann (ed.), 2009. "Poverty, Inequality, and Policy in Latin America," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262113244, November.
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    Keywords

    income inequality; human capital inequality; external conditions; policy regimes; Latin America.;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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