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The Pink Tide and Inequality in Latin America

Author

Listed:
  • Gérman Feierherd
  • Patricio Larroulet
  • Wei Long
  • Nora Lustig

    (Stone Center for Latin American Studies, Department of Economics, Tulane University, Commitment to Equity Institute (CEQ).)

Abstract

Latin American countries experienced a significant reduction in income inequality at the turn of the 21st century. From the early 2000s to around 2012, the average Gini coefficient fell from 0.514 to 0.476. The period of falling inequality coincided with leftist presidential candidates achieving electoral victories across the region: by 2009, ten of the seventeen countries had a leftist president – the so-called Pink Tide. We investigate whether there was a “leftist premium” on the decline in inequality and, if there was one, through which mechanisms. Using a range of econometric models, inequality measurements, and samples, we find evidence that leftist governments lowered income inequality faster than non-leftist regimes, increasing the income share captured by the first seven deciles at the expense of the top ten percent. Our analysis suggests that this reduction was achieved by increasing social pensions, minimum wages, and tax revenue.

Suggested Citation

  • 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.
  • Handle: RePEc:tul:ceqwps:105
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    File URL: http://repec.tulane.edu/RePEc/ceq/ceq105.pdf
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    References listed on IDEAS

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    1. Ernesto Stein & Lorena Caro, 2017. "Ideology and Taxation in Latin America," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 1-27, April.
    2. Nora Lustig, 2017. "Fiscal Policy, Income Redistribution and Poverty Reduction in Low and Middle Income Countries," Commitment to Equity (CEQ) Working Paper Series 54, Tulane University, Department of Economics.
    3. David De Ferranti & Guillermo E. Perry & Francisco H.G. Ferreira & Michael Walton, 2004. "Inequality in Latin America : Breaking with History?," World Bank Publications - Books, The World Bank Group, number 15009, December.
    4. Thelen,Kathleen, 2014. "Varieties of Liberalization and the New Politics of Social Solidarity," Cambridge Books, Cambridge University Press, number 9781107679566, November.
    5. Giovanni Andrea Cornia, 2010. "Income Distribution under Latin America's New Left Regimes," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 11(1), pages 85-114.
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    9. 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.
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    Cited by:

    1. Paul Segal, 2022. "On the Character and Causes of Inequality in Latin America," Development and Change, International Institute of Social Studies, vol. 53(5), pages 1087-1102, September.

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    More about this item

    Keywords

    income inequality; government ideology; Latin America; redistribution; direct transfers; minimum wage; taxation;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • N36 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Latin America; Caribbean
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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