IDEAS home Printed from https://ideas.repec.org/p/tul/wpaper/2011.html
   My bibliography  Save this paper

Inequality and Social Policy in Latin America

Author

Listed:
  • Nora Lustig

    (Tulane University and Commitment to Equity Institute)

Abstract

This paper analyzes the evolution and determinants of inequality between 1990 and 2017 in Latin America. Throughout the period, inequality in the region has demonstrated three trends: it increased during the 1990s; decreased between 2002 and 2013; and, since 2014, it has remained constant or even increased depending on the country. The reduction of inequality in the second period corresponded to two main changes in social policy: (I) the expansion in access to education in the previous period, which led to a decrease in the salary gap; and (II) the expansion and progresivity of monetary transfers. However, despite improvements in income distribution, in recent years, there has been a wave of protests in various countries. This paper proposes possible explanations of this apparently paradoxical phenomenon. Finally, this paper analyzes the impact of fiscal policy on inequality and poverty using comparative data from fiscal incidence analysis. Although in all countries the combination of taxes, social spending, and consumption subsidies reduces inequality, it does not always reduce poverty.

Suggested Citation

  • Nora Lustig, 2020. "Inequality and Social Policy in Latin America," Working Papers 2011, Tulane University, Department of Economics.
  • Handle: RePEc:tul:wpaper:2011
    as

    Download full text from publisher

    File URL: http://repec.tulane.edu/RePEc/pdf/tul2011.pdf
    File Function: First Version, November 2020
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Raymundo Campos & Gerardo Esquivel & Nora Lustig, 2012. "The Rise and Fall of Income Inequality in Mexico, 1989–2010," Working Papers 267, ECINEQ, Society for the Study of Economic Inequality.
    2. Marisa Bucheli & Nora Lustig & Máximo Rossi & Florencia Amábile, 2012. "Social Spending, Taxes and Income Redistribution in Uruguay," Documentos de Trabajo (working papers) 1212, Department of Economics - dECON.
    3. Herwig Immervoll & Henrik Jacobsen Kleven & Claus Thustrup Kreiner & Nicolaj Verdelin, 2008. "An Evaluation of the Tax-Transfer Treatment of Married Couples in European Countries," EPRU Working Paper Series 08-03, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    4. Ali Enami , Nora Lustig and Rodrigo Aranda, 2017. "Analytic Foundations: Measuring the Redistributive Impact of Taxes and Transfers - Working Paper 446," Working Papers 446, Center for Global Development.
    5. Leonardo Gasparini & Nora Lustig, 2011. "The Rise and Fall of Income Inequality in Latin America," Working Papers 1110, Tulane University, Department of Economics.
    6. Augusto de la Torre & Samuel Pienknagura & Eduardo Levy Yeyati, 2013. "Latin America and the Caribbean as Tailwinds Recede : In Search of Higher Growth, LAC Semiannual Report, April 2013," World Bank Other Operational Studies, The World Bank, number 13266.
    7. Nora Lustig & Carola Pessino, 2013. "Social spending and income redistribution in Argentina during the 2000s: The rising noncontributory pensions," Commitment to Equity (CEQ) Working Paper Series 05, Tulane University, Department of Economics, revised Aug 2013.
    8. Freddy Paúl Llerena Pinto & M. Cristhina Llerena Pinto & M. Andrea Llerena Pinto, 2015. "Social Spending, Taxes and Income Redistribution in Ecuador," Commitment to Equity (CEQ) Working Paper Series 28, Tulane University, Department of Economics.
    9. Darío Rossignolo, 2016. "Taxes, Expenditures, Poverty and Income Distribution in Argentina," Commitment to Equity (CEQ) Working Paper Series 45, Tulane University, Department of Economics.
    10. Ali Enami & Nora Lustig & Rodrigo Aranda, 2016. "Analytic Foundations: Measuring the Redistributive Impact of Taxes and Transfers," Commitment to Equity (CEQ) Working Paper Series 25, Tulane University, Department of Economics.
    11. Herwig Immervoll & Horacio Levy & José Ricardo Nogueira & Cathal O´Donoghue & Rozane Bezerra de Siqueira, 2005. "The Impact of Brazil´s Tax-Benefit System on Inequality and Poverty," Ibero America Institute for Econ. Research (IAI) Discussion Papers 117, Ibero-America Institute for Economic Research.
    12. Cabrera, Maynor & Lustig, Nora & Morán, Hilcías E., 2015. "Fiscal Policy, Inequality, and the Ethnic Divide in Guatemala," World Development, Elsevier, vol. 76(C), pages 263-279.
    13. Lustig, Nora & Lopez-Calva, Luis F. & Ortiz-Juarez, Eduardo, 2013. "Declining Inequality in Latin America in the 2000s: The Cases of Argentina, Brazil, and Mexico," World Development, Elsevier, vol. 44(C), pages 129-141.
    14. repec:unu:wpaper:wp2012-10 is not listed on IDEAS
    15. Ignacio Flores & Claudia Sanhueza & Jorge Atria & Ricardo Mayer, 2020. "Top Incomes in Chile: A Historical Perspective on Income Inequality, 1964–2017," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 66(4), pages 850-874, December.
    16. Maynor Cabrera, Nora Lustig, and Hilcías E. Morán, 2015. "Fiscal Policy, Inequality, and the Ethnic Divide in Guatemala - Working Paper 397," Working Papers 397, Center for Global Development.
    17. Ali Enami & Nora Lustig & Rodrigo Aranda, 2016. "Analytic Foundations: Measuring the Redistributive Impact of Taxes and Transfers," Commitment to Equity (CEQ) Working Paper Series 1325, Tulane University, Department of Economics.
    18. Diego Battistón & Carolina García-Domench & Leonardo Gasparini, 2014. "Could an Increase in Education Raise Income Inequality? Evidence for Latin America," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 51(1), pages 1-39, May.
    19. Raymundo Campos & Gerado Esquivel & Nora Lustig, 2012. "The Rise and Fall of Income Inequality in Mexico, 1989-2010," Working Papers 1201, Tulane University, Department of Economics.
    20. Nora Lustig & Carola Pessino, 2013. "Social spending and income redistribution in Argentina during the 2000s: The rising noncontributory pensions," Commitment to Equity (CEQ) Working Paper Series 1305, Tulane University, Department of Economics, revised Aug 2013.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nora Lustig, 2020. "Inequality and Social Policy in Latin America," Commitment to Equity (CEQ) Working Paper Series 94, Tulane University, Department of Economics.
    2. Nora Lustig, 2016. "Fiscal policy, inequality, and the poor in the developing world," WIDER Working Paper Series wp-2016-164, World Institute for Development Economic Research (UNU-WIDER).
    3. Nora Lustig, 2016. "Fiscal policy, inequality and the poor in the developing world," Working Papers 418, ECINEQ, Society for the Study of Economic Inequality.
    4. 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.
    5. Higgins, Sean & Lustig, Nora, 2016. "Can a poverty-reducing and progressive tax and transfer system hurt the poor?," Journal of Development Economics, Elsevier, vol. 122(C), pages 63-75.
    6. Marisa Bucheli, 2014. "Public Transfers and Poverty Reduction: an Evaluation of Program Contribution to the Exit Rate from Poverty of Children and the Elderly," Documentos de Trabajo (working papers) 0914, Department of Economics - dECON.
    7. Sean Higgins & Nora Lustig & Whitney Ruble & Timothy M. Smeeding, 2016. "Comparing the Incidence of Taxes and Social Spending in Brazil and the United States," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(S1), pages 22-46, August.
    8. Cabrera, Maynor & Lustig, Nora & Morán, Hilcías E., 2015. "Fiscal Policy, Inequality, and the Ethnic Divide in Guatemala," World Development, Elsevier, vol. 76(C), pages 263-279.
    9. Nora Lustig, 2015. "Fiscal Policy and Ethno-Racial Inequality in Bolivia, Brazil, Guatemala and Uruguay," Commitment to Equity (CEQ) Working Paper Series 22, Tulane University, Department of Economics.
    10. Ocampo, José Antonio & Gómez-Arteaga, Natalie, 2017. "Social protection systems, redistribution and growth in Latin America," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    11. Gabriel Burdin & Fernando Esponda & Andrea Vigorito, 2004. "Inequality and Top Income in Uruguay: A Comparison between Household Surveys and Income Tax Micro-data," World Inequality Lab Working Papers halshs-02654095, HAL.
    12. Nora Lustig, 2015. "The Redistributive Impactive of Government Spending on Education and Health Evidence from Thirteen Developing Countries in the Commitment to Equity Project," Commitment to Equity (CEQ) Working Paper Series 30, Tulane University, Department of Economics.
    13. Nora Lustig, 2016. "The Sustainable Development Goals, Domestic Resource Mobilization and the Poor," Commitment to Equity (CEQ) Working Paper Series 61, Tulane University, Department of Economics.
    14. Nora Lustig & Florencia Amábile & Marisa Bucheli & George Gray Molina & Sean Higgins & Miguel Jaramillo & Wilson Jiménez Pozo & Veronica Paz Arauco & Claudiney Pereira & Carola Pessino & Máximo Rossi , 2013. "The impact of taxes and social spending on inequality and poverty in Argentina, Bolivia, Brazil, Mexico, Peru, and Uruguay," Commitment to Equity (CEQ) Working Paper Series 1313, Tulane University, Department of Economics, revised Aug 2013.
    15. Nora Lustig & Florencia Amábile & Marisa Bucheli & George Gray Molina & Sean Higgins & Miguel Jaramillo & Wilson Jiménez Pozo & Veronica Paz Arauco & Claudiney Pereira & Carola Pessino & Máximo Rossi , 2013. "The impact of taxes and social spending on inequality and poverty in Argentina, Bolivia, Brazil, Mexico, Peru, and Uruguay," Commitment to Equity (CEQ) Working Paper Series 13, Tulane University, Department of Economics, revised Aug 2013.
    16. Jon Jellema & Nora Lustig & Astrid Haas & Sebastian Wolf, 2016. "The Impact of Taxes, Transfers, and Subsidies on Inequality and Poverty in Uganda," Commitment to Equity (CEQ) Working Paper Series 53, Tulane University, Department of Economics.
    17. Vito Tanzi, 2013. "Tax reform in Latin America: a long term assessment," Commitment to Equity (CEQ) Working Paper Series 1315, Tulane University, Department of Economics.
    18. Pessino, Carola & Izquierdo, Alejandro & Vuletin, Guillermo, 2018. "Better Spending for Better Lives: How Latin America and the Caribbean Can Do More with Less," IDB Publications (Books), Inter-American Development Bank, number 9152, October.
    19. Sean Higgins & Nora Lustig, 2015. "Can Poverty-Reducing and Progressive Tax and Transfer System Hurt the Poor?," Commitment to Equity (CEQ) Working Paper Series 1333, Tulane University, Department of Economics.

    More about this item

    Keywords

    Fiscal incidence; Inequality; Poverty; Taxes; Social spending; Latin America.;
    All these keywords.

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tul:wpaper:2011. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/detulus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Valentina Martinez Pabon (email available below). General contact details of provider: https://edirc.repec.org/data/detulus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.