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Inequality in Latin America : determinants and consequences

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  • Lopez , J. Humberto
  • Perry, Guillermo

Abstract

Latin America is together with Sub-Saharan Africa the most unequal region of the world. This paper documents recent inequality trends in the Latin American region, going beyond traditional measures of income inequality. The paper also reviews some of the explanations that have been put forward to understand the current situation, and discusses why reducing income inequality should be an important policy priority. In particular, the authors discuss channels through which inequality can affect growth and output volatility. On the whole, the analysis suggests a two-pronged approach to reduce inequality in the region that combines policies aimed at improving the distribution of assets (especially education) with elements aimed at improving the capacity of the state to redistribute income through taxes and transfers.

Suggested Citation

  • Lopez , J. Humberto & Perry, Guillermo, 2008. "Inequality in Latin America : determinants and consequences," Policy Research Working Paper Series 4504, The World Bank.
    • Handle: RePEc:wbk:wbrwps:4504
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    2. Antonio Andres & Carlyn Ramlogan-Dobson, 2011. "Is Corruption Really Bad for Inequality? Evidence from Latin America," Journal of Development Studies, Taylor & Francis Journals, vol. 47(7), pages 959-976.
    3. Irarrázaval, Andrés, 2020. "The fiscal origins of comparative inequality levels: an empirical and historical investigation," LSE Research Online Documents on Economics 107491, London School of Economics and Political Science, LSE Library.
    4. Matilde Isabela Angarita Serrano, 2021. "Entre becas y aulas: ¿Cómo cerramos la brecha?," Documentos CEDE 18901, Universidad de los Andes, Facultad de Economía, CEDE.
    5. Peter Mikek, 2023. "Financial deepening and income inequality: is there a financial Kuznetz curve in Latin America?," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 13(1), pages 103-125, March.
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    7. Jeffrey G. Williamson, 2009. "Five Centuries of Latin American Inequality," NBER Working Papers 15305, National Bureau of Economic Research, Inc.
    8. Carneiro, Jorge & Matos, Nancy & Husted, Bryan, 2015. "Free markets and social inclusion: Toward a common goal," Journal of Business Research, Elsevier, vol. 68(2), pages 173-176.
    9. Louise Cord & Oscar Barriga†Cabanillas & Leonardo Lucchetti & Carlos Rodríguez†Castelán & Liliana D. Sousa & Daniel Valderrama, 2017. "Inequality Stagnation in Latin America in the Aftermath of the Global Financial Crisis," Review of Development Economics, Wiley Blackwell, vol. 21(1), pages 157-181, February.
    10. Raymundo M. Campos-Vázquez & Andrés Hincapié & Ruben Irvin Rojas-Valdés, 2012. "Family Income Inequality and the Role of Married Females' Earnings in Mexico: 1988-2010," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 49(1), pages 67-98, May.
    11. Puyana, Alicia., 2011. "Economic growth, employment and poverty reduction : a comparative analysis of Chile and Mexico," ILO Working Papers 994629623402676, International Labour Organization.
    12. Vincens, Natalia & Emmelin, Maria & Stafström, Martin, 2018. "Social capital, income inequality and the social gradient in self-rated health in Latin America: A fixed effects analysis," Social Science & Medicine, Elsevier, vol. 196(C), pages 115-122.
    13. Jorge Alvarez & Felipe Benguria & Niklas Engbom & Christian Moser, 2018. "Firms and the Decline in Earnings Inequality in Brazil," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(1), pages 149-189, January.
    14. Malik Fercovic, 2022. "Disentangling Meritocracy Among the Long-Range Upwardly Mobile: The Chilean Case," Sociological Research Online, , vol. 27(1), pages 118-135, March.
    15. Andres Irarrazaval, 2022. "The Fiscal Origins of Comparative Inequality levels: An Empirical and Historical Investigation," Working Papers wp531, University of Chile, Department of Economics.
    16. Irarrázaval, Andrés, 2020. "The fiscal origins of comparative inequality levels: an empirical and historical investigation," Economic History Working Papers 107491, London School of Economics and Political Science, Department of Economic History.
    17. Leopoldo TORNAROLLI & Matías CIASCHI & Luciana GALEANO, 2018. "Income Distribution in Latin America. The Evolution in the Last 20 Years: A Global Approach," Working Paper 0b1f0e35-82be-4853-8fac-2, Agence française de développement.
    18. Raymundo M. Campos Vázquez & Andrés Hincapie & Rubén I. Rojas Valdés, 2011. "Family Income Inequality and the Role of Wives Earnings in Mexico: 1988-2010," Serie documentos de trabajo del Centro de Estudios Económicos 2011-07, El Colegio de México, Centro de Estudios Económicos.
    19. Hans-Jürgen Burchardt & Nico Weinmann, 2012. "Social Inequality and Social Policy outside the OECD: A New Research Perspective on Latin America," ICDD Working Papers 5, University of Kassel, Fachbereich Gesellschaftswissenschaften (Social Sciences), Internatioanl Center for Development and Decent Work (ICDD).
    20. Julia Fonseca & Adrien Matray, 2022. "Financial Inclusion, Economic Development, and Inequality: Evidence from Brazil," Working Papers 308, Princeton University, Department of Economics, Center for Economic Policy Studies..
    21. Faguet, Jean-Paul & Shami, Mahvish, 2008. "Fiscal policy and spatial inequality in Latin America and beyond," LSE Research Online Documents on Economics 27162, London School of Economics and Political Science, LSE Library.
    22. Dobado González, Rafael & García Montero, Héctor, 2010. "Colonial Origins of Inequality in Hispanic America? Some Reflections Based on New Empirical Evidence," Revista de Historia Económica / Journal of Iberian and Latin American Economic History, Cambridge University Press, vol. 28(2), pages 253-277, September.
    23. Rabindra Bhandari & Gyan Pradhan & Mukti Upadhyay, 2010. "Another empirical look at the Kuznets curve," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 3(2), pages 7-19, December.
    24. Gustavo Yamada & Juan Francisco Castro & Nelson Oviedo, 2016. "Revisitando el coeficiente de Gini en el Perú: El rol de las políticas públicas en la evolución de la desigualdad," Working Papers 16-06, Centro de Investigación, Universidad del Pacífico.

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    Keywords

    Inequality; Rural Poverty Reduction; Economic Conditions and Volatility; Achieving Shared Growth; Poverty Impact Evaluation;
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