La desigualdad del ingreso en Uruguay entre 1986 y 2009
The purpose of this study is to analyze the evolution of income inequality in Uruguay in 1986-2009 and its main driving forces. During 1986-1994 inequality remained almost unchanged, whearas it grew in 1994-2007 and startd to fall in 2007-2009. We carry out an inequality decomposition by income source which shows that the evolution of earning inequality and the inception of non contributory public transfers are the main explanatory factors of the evolution of inequality across the whole period. The inception of income transfer schemes, targeted towards the first income quintile contribute to explain the recent descent in inequality. In order to single out the main factors explaining the evolution of earnings inequality we carried out a micro simulation exercise. Results show that increasing returns to education were the main factor underlying this evolution. The recent decrease in inequality is also associated to the decrease in skill premia. At the same time, increasing employment rates and the reduction of the regional gap also had an equalizing effect. Meanwhile the scarce contribution of schooling in general and, specifically, in the recent descent in inequality poses a challenge for the design of educational policies. Our study also suggests that most of the recent reduction in inequality is related to the recent redistributive reforms such as increasing the value of minimum wages, centralized wage-setting mechanisms and the income tax. It is still too soon to assess whether this recent movement is a permanent trend. The analysis was based in the Uruguayan Household Surveys (Encuestas Continuas de Hogares) carried out by Instituto Nacional de Estadística.
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