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Why have poverty and income inequality increased so much? Argentina 1991-2002

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  • Martin Gonzalez-Rozada
  • Alicia Menendez

Abstract

This paper analyzes the sources of changes in poverty and income inequality among Argentine households during the 1991-2001 period. We assess the e ect of changes in labor market participation, unemployment, education levels, and returns to human capital on income inequality and poverty by using a micro-simulation approach. This procedure allows us to evaluate the impact of each one of those changes on several measures of income inequality and poverty during the nineties. We found that unemployment accounts for a large part of the increase in income inequality and poverty that this country experienced in the last decade. In January 2002, Argentina declared the default on its external debt and devaluated the peso 40% ending the convertibility period. Since then, a growing inflation is a ecting the purchasing power of Argentine households for the first time in more than ten years. Using our methodology we estimate the e ect of the emerging inflation on poverty among households. Our findings indicate that inflation increases poverty significantly at least in the short run.

Suggested Citation

  • Martin Gonzalez-Rozada & Alicia Menendez, 2002. "Why have poverty and income inequality increased so much? Argentina 1991-2002," Business School Working Papers treintayuno, Universidad Torcuato Di Tella.
  • Handle: RePEc:udt:wpbsdt:treintayuno
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    File URL: http://www.utdt.edu/departamentos/empresarial/cif/pdfs-wp/wpcif-012002.pdf
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    References listed on IDEAS

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    1. Lee, Lung-fei & Maddala, G S & Trost, R P, 1980. "Asymptotic Covariance Matrices of Two-Stage Probit and Two-Stage Tobit Methods for Simultaneous Equations Models with Selectivity," Econometrica, Econometric Society, vol. 48(2), pages 491-503, March.
    2. Lee, Lung-Fei, 1983. "Generalized Econometric Models with Selectivity," Econometrica, Econometric Society, vol. 51(2), pages 507-512, March.
    3. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-442, June.
    4. Altimir, Oscar & Beccaría, Luis Alberto, 1998. "Efectos de los cambios macroeconómicos y de las reformas sobre la pobreza urbana en Argentina," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 31166, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    5. Almeida dos Reis, Jose Guilherme & Paes de Barros, Ricardo, 1991. "Wage inequality and the distribution of education : A study of the evolution of regional differences in inequality in metropolitan Brazil," Journal of Development Economics, Elsevier, pages 117-143.
    6. Cesar Patricio Bouillon & Arianna Legovini & Nora Lustig, 2003. "Rising Inequality in Mexico: Household Characteristics and Regional Effects," Journal of Development Studies, Taylor & Francis Journals, vol. 39(4), pages 112-133.
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    Cited by:

    1. Francois Bourguignon & Francisco H.G. Ferreira & Nora Lustig, 2005. "The Microeconomics of Income Distribution Dynamics in East Asia and Latin America," World Bank Publications, The World Bank, number 14844.
    2. Facundo Alvaredo, 2007. "The Rich in Argentina over the twentieth century: From the Conservative Republic to the Peronist experience and beyond 1932-2004," PSE Working Papers halshs-00588318, HAL.
    3. World Bank, 2005. "Argentina : Sources of Growth, Seeking Sustained Economic Growth with Social Equity," World Bank Other Operational Studies 8329, The World Bank.
    4. Arbache, Jorge Saba, 2004. "Do Structural Reforms always Succeed? Lessons from Brazil," WIDER Working Paper Series 058, World Institute for Development Economic Research (UNU-WIDER).

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