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Income Inequality in Bolivia, Colombia, and Ecuador: Different Reasons

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  • Aristizábal-Ramírez, María

    () (Universidad EAFIT)

  • Canavire Bacarreza, Gustavo J

    () (Inter-American Development Bank)

  • Jetter, Michael

    () (University of Western Australia)

Abstract

This paper analyzes the individual-level determinants of wage inequality for Bolivia, Colombia, and Ecuador from 2001 to 2010. Using a rich annual data set from surveys in all three countries, we analyze wages both using conventional wage regressions and decompositions of standard Gini indices. Although popular opinion and standard Gini indices suggest Colombia to exhibit the most unequal distribution of income among these countries, our results suggest otherwise. If one assumes educational attainment to form part of one's own responsibility the Colombian income distribution appears more equal than Bolivia's or Ecuador's. In 2010, educational achievement explains over 10.9 percent of the Gini score in Colombia, 6.3 percent in Ecuador, and a mere 2.4 percent in Bolivia. Our findings show that the sources of income inequality can differ substantially across countries. Respective policy prescriptions should differ accordingly.

Suggested Citation

  • Aristizábal-Ramírez, María & Canavire Bacarreza, Gustavo J & Jetter, Michael, 2015. "Income Inequality in Bolivia, Colombia, and Ecuador: Different Reasons," IZA Discussion Papers 9210, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp9210
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    1. Luis Eduardo Arango & Carlos Esteban Posada, 2007. "Los Salarios De Los Funcionariospúblicos En Colombia, 1978-2005," Revista ESPE - ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE, vol. 25(55), pages 110-147, December.
    2. Juan Pablo Atal & Hugo Nopo & Natalia Winder, 2009. "New Century, Old Disparities: Gender and Ethnic Wage Gaps in Latin America," Research Department Publications 4640, Inter-American Development Bank, Research Department.
    3. Gustavo Canavire-Bacarreza & Fernando Rios-Avila, 2015. "On the Determinants of Changes in Wage Inequality in Bolivia," Economics Working Paper Archive wp_835, Levy Economics Institute.
    4. Alejandro Badel & Ximena Peña, 2010. "Decomposing the Gender Wage Gap with Sample Selection Adjustment: Evidence from Colombia," Revista de Analisis Economico – Economic Analysis Review, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines, vol. 25(2), pages 169-191, Diciembre.
    5. Jean-François Carpantier & Christelle Sapata, 2013. "An Ex-Post View of Inequality of Opportunity in France and its Regions," Journal of Labor Research, Springer, vol. 34(3), pages 281-311, September.
    6. Diego F. Angel-Urdinola & Quentin Wodon, 2006. "The Gender Wage Gap and Poverty in Colombia," LABOUR, CEIS, vol. 20(4), pages 721-739, December.
    7. Luis Eduardo Arango & Carlos Esteban Posada, 2007. "Los Salarios De Los Funcionariospúblicos En Colombia, 1978-2005," Revista ESPE - ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE, vol. 25(55), pages 110-147, December.
    8. Almås, Ingvild & Cappelen, Alexander W. & Lind, Jo Thori & Sørensen, Erik Ø. & Tungodden, Bertil, 2011. "Measuring unfair (in)equality," Journal of Public Economics, Elsevier, vol. 95(7), pages 488-499.
    9. Eicher, Theo S. & Garcia-Penalosa, Cecilia, 2001. "Inequality and growth: the dual role of human capital in development," Journal of Development Economics, Elsevier, vol. 66(1), pages 173-197, October.
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    11. Juan Pablo Atal & Hugo Nopo & Natalia Winder, 2009. "New Century, Old Disparities: Gender and Ethnic Wage Gaps in Latin America," Research Department Publications 4640, Inter-American Development Bank, Research Department.
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    Cited by:

    1. Canavire Bacarreza, Gustavo J & Carvajal-Osorio, Luis C., 2018. "Two Stories of Wage Dynamics in Latin America: Different Policies, Different Outcomes," IZA Discussion Papers 11584, Institute for the Study of Labor (IZA).
    2. Andrew J. Hussey & Michael Jetter & Dianne McWilliam, 2017. "Explaining Inequality Between Countries: The Declining Role of Political Institutions," CESifo Working Paper Series 6320, CESifo Group Munich.

    More about this item

    Keywords

    income inequality; Gini coefficient; unfair inequality;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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