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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
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Income inequality; wage gap; government transfers; Latin America;
    All these keywords.

    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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