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The Decline in Inequality in Latin America: How Much, Since When and Why

Author

Listed:
  • Nora Lustig

    () (Department of Economics, Tulane University)

  • Luis F. Lopez-Calva

    () (Poverty and Gender Unit, Latin America and the Caribbean, the World Bank)

  • Eduardo Ortiz-Juarez

    () (Poverty, Human Development and Millennium Development Goal Unit, Regional Bureau for Latin America and the Caribbean, United Nations Development Programme (UNDP))

Abstract

Between 2000 and 2009, the Gini coefficient declined in 13 of 17 Latin American countries for which comparable data exist. The decline was statistically significant and robust to changes in the time interval, inequality measures and data sources. In depth country studies for Argentina, Brazil, Mexico and Peru suggest that there are two phenomena which underlie this trend: (i) a fall in the premium to skilled labor (as measured by returns to education); and (ii) higher and more progressive government transfers. The fall in the premium to skills results from a combination of supply and demand factors and, in Argentina and, to a lesser extent, in Brazil, from more active labor market policies as well.

Suggested Citation

  • Nora Lustig & Luis F. Lopez-Calva & Eduardo Ortiz-Juarez, 2011. "The Decline in Inequality in Latin America: How Much, Since When and Why," Working Papers 1118, Tulane University, Department of Economics.
  • Handle: RePEc:tul:wpaper:1118
    as

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    File URL: http://repec.tulane.edu/RePEc/pdf/tul1118.pdf
    File Function: First version, 2011
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    References listed on IDEAS

    as
    1. Jaime Saavedra-Chanduví & José R. Molinas & Ricardo Paes de Barros & Francisco H. G. Ferreira, 2009. "Measuring Inequality of Opportunities in Latin America and the Caribbean," IDB Publications (Books), Inter-American Development Bank, number 361.
    2. Marco Manacorda & Carolina Sanchez-Paramo & Norbert Schady, 2010. "Changes in Returns to Education in Latin America: The Role of Demand and Supply of Skills," ILR Review, Cornell University, ILR School, vol. 63(2), pages 307-326, January.
    3. Stark, Oded & Taylor, J Edward & Yitzhaki, Shlomo, 1986. "Remittances and Inequality," Economic Journal, Royal Economic Society, vol. 96(383), pages 722-740, September.
    4. Ricardo Paes de Barros & Francisco H.G. Ferreira & Jose R. Molinas Vega & Jaime Saavedra Chanduvi, 2009. "Measuring Inequality of Opportunities in Latin America and the Caribbean," World Bank Publications, The World Bank, number 2580, September.
    5. Ariel Fiszbein & Norbert Schady & Francisco H.G. Ferreira & Margaret Grosh & Niall Keleher & Pedro Olinto & Emmanuel Skoufias, 2009. "Conditional Cash Transfers : Reducing Present and Future Poverty," World Bank Publications, The World Bank, number 2597, June.
    6. Ferreira, Francisco H. G. & Leite, Phillippe G. & Wai-Poi, Matthew, 2007. "Trade liberalization, employment flows, and wage inequality in Brazil," Policy Research Working Paper Series 4108, The World Bank.
    7. repec:idb:brikps:60098 is not listed on IDEAS
    8. Guillermo Cruces & Leonardo Gasparini, 2008. "A Distribution in Motion: The Case of Argentina," CEDLAS, Working Papers 0078, CEDLAS, Universidad Nacional de La Plata.
    9. David De Ferranti & Guillermo E. Perry & Francisco H.G. Ferreira & Michael Walton, 2004. "Inequality in Latin America : Breaking with History?," World Bank Publications, The World Bank, number 15009, June.
    10. Leonardo Gasparini & Guillermo Cruces & Leopoldo Tornarolli & Mariana Marchionni, 2009. "A Turning Point? Recent Developments on Inequality in Latin America and the Caribbean," CEDLAS, Working Papers 0081, CEDLAS, Universidad Nacional de La Plata.
    11. Ferreira, Francisco H.G. & Ravallion, Martin, 2008. "Global poverty and inequality : a review of the evidence," Policy Research Working Paper Series 4623, The World Bank.
    Full references (including those not matched with items on IDEAS)

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The Decline in Inequality in Latin America: How Much, Since When and Why
      by maximorossi in NEP-LTV blog on 2011-05-16 19:32:20

    Citations

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    Cited by:

    1. Nathalie Chusseau & Joël Hellier, 2012. "Inequality in Emerging Countries," Working Papers hal-00993411, HAL.
    2. Kanbur, Ravi, 2012. "Does Kuznets Still Matter?," Working Papers 128794, Cornell University, Department of Applied Economics and Management.
    3. Peter Edward, Andy Sumner, 2013. "The Geography of Inequality: Where and by How Much Has Income Distribution Changed since 1990?-Working Paper 341," Working Papers 341, Center for Global Development.
    4. Kanbur, Ravi, 2013. "Economic Inequality and Economic Development: Lessons and Implications of Global Experiences for the Arab World," Working Papers 180077, Cornell University, Department of Applied Economics and Management.
    5. Bird, Richard M. & Zolt, Eric M., 2015. "Fiscal Contracting in Latin America," World Development, Elsevier, vol. 67(C), pages 323-335.
    6. Mathias Silva, 2016. "TIC y Desigualdad Salarial en Uruguay," Documentos de Investigación Estudiantil (students working papers) 16-06, Instituto de Economía - IECON.
    7. Irene Brambilla & Darío Tortarolo, 2015. "Growth in Labor Earnings Across the Income. Distribution: Latin America During the 2000s," CEDLAS, Working Papers 0182, CEDLAS, Universidad Nacional de La Plata.
    8. Peter Edward & Andy Sumner, 2013. "Inequality from a global perspective: An alternative approach," Working Papers 302, ECINEQ, Society for the Study of Economic Inequality.
    9. Yang Wang, 2015. "Education Expansion and Decline in Tertiary Premium in Brazil: 1995-2013," Working Papers 1525, Tulane University, Department of Economics.
    10. Jan Siegmeier & Linus Mattauch & Max Franks & David Klenert & Anselm Schultes & Ottmar Edenhofer, 2015. "A Public Finance Perspective on Climate Policy: Six Interactions That May Enhance Welfare," Working Papers 2015.31, Fondazione Eni Enrico Mattei.
    11. Nancy Birdsall, Nora Lustig, Christian Meyer, 2013. "The Strugglers: The New Poor in Latin America?-Working Paper 337," Working Papers 337, Center for Global Development.
    12. Fiszbein, Ariel & Kanbur, Ravi & Yemtsov, Ruslan, 2013. "Social Protection, Poverty, and the Post-2015 Agenda," Working Papers 180070, Cornell University, Department of Applied Economics and Management.
    13. repec:ris:badest:0781 is not listed on IDEAS
    14. Azevedo, Joao Pedro & Davalos, Maria Eugenia & Diaz-Bonilla, Carolina & Atuesta, Bernardo & Castaneda, Raul Andres, 2013. "Fifteen years of inequality in Latin America : how have labor markets helped ?," Policy Research Working Paper Series 6384, The World Bank.
    15. González, Mariano & Larrú, José María, 2012. "Egalitarian aid. The impact of aid on Latin American inequality," MPRA Paper 41660, University Library of Munich, Germany.
    16. repec:clp:wpaper:wp26 is not listed on IDEAS
    17. Andy Sumner, 2012. "The Buoyant Billions: How “Middle Class†Are the New Middle Classes in Developing Countries? (And Why Does It Matter?)," Working Papers id:5169, eSocialSciences.
    18. World Bank, 2013. "Managing Medium-Term Fiscal Challenges," World Bank Other Operational Studies 16573, The World Bank.

    More about this item

    Keywords

    Income inequality; wage gap; government transfers; Latin America;

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy

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