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Fiscal policy, inequality and the ethnic divide in Guatemala

Author

Listed:
  • Maynor Cabrera

    (Fedes)

  • Nora Lustig

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

  • Hilcías E. Morán

    (Bank of Guatemala)

Abstract

Guatemala is one of the most unequal countries in Latin America and has the highest incidence of poverty. The indigenous population is more than twice as likely of being poor than the nonindigenous group. Fiscal incidence analysis based on the 2009-2010 National Survey of Family Income and Expenditures shows that taxes and transfers do almost nothing to reduce inequality and poverty overall or along ethnic and rural- urban lines. Persistently low tax revenues are the main limiting factor. Tax revenues are not only low but also regressive. Consumption taxes are regressive enough to offset the benefits of cash transfers: poverty after taxes and cash transfers is higher than market income poverty.

Suggested Citation

  • Maynor Cabrera & Nora Lustig & Hilcías E. Morán, 2014. "Fiscal policy, inequality and the ethnic divide in Guatemala," Commitment to Equity (CEQ) Working Paper Series 20, Tulane University, Department of Economics.
    • Handle: RePEc:tul:ceqwps:20
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    More about this item

    Keywords

    inequality; poverty; ethnic divide; fiscal incidence; taxes; social spending; Guatemala;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality

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