Declining Inequality in Latin America

Declining Inequality in Latin America: A Decade of Progress?

Luis F. López-Calva
Nora Lustig
Copyright Date: 2010
Pages: 253
https://www.jstor.org/stable/10.7864/j.ctt6wpdkq
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  • Book Info
    Declining Inequality in Latin America
    Book Description:

    Latin America is often singled out for its high and persistent income inequality. Toward the end of the 1990s, however, income concentration began to fall across the region. Of the seventeen countries for which comparable data are available, twelve have experienced a decline, particularly since 2000. This book is among the first efforts to understand what happened in these countries and why.

    Led by editors Felipe López-Calva and Nora Lustig, a panel of distinguished economists undertakes in-depth analyses of Argentina, Brazil, Mexico, and Peru. In addition, they provide essential background in the form of overviews of the relationship between markets and inequality, the political economy of redistribution, and the evolution of income inequality in the advanced industrialized economies. Two factors account for much of the decline in inequality: a decrease in the wage gap between skilled and low-skilled labor, and an increase in government transfers targeted to the poor.

    Thanks to the timeliness and sophistication of these essays, Declining Inequality in Latin America is likely to become a standard reference in its field.

    eISBN: 978-0-8157-0444-7
    Subjects: Political Science, Business, Sociology

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Foreword
    (pp. vii-viii)
    Rebeca Grynspan

    One of the key strategic objectives of the United National Development Programme is to strengthen the capabilities of governments to reduce poverty and inequality and promote social inclusion, engaging and empowering the people for whom development policies are meant. This objective is particularly relevant in Latin America and the Caribbean, a region characterized by persistently high levels of inequality. Because of inequality, although many countries are on track to meet the MDGs at the national level, poor regions and excluded groups within middle-income Latin American countries most likely may not. At present the international community is focused in providing support...

  4. Acknowledgments
    (pp. ix-x)
  5. 1 Explaining the Decline in Inequality in Latin America: Technological Change, Educational Upgrading, and Democracy
    (pp. 1-24)
    LUIS F. LÓPEZ-CALVA and NORA LUSTIG

    Latin America often is singled out because of its high and persistent income inequality. With a Gini coefficient of 0.53 in the mid-2000s,¹ Latin America was 18 percent more unequal than Sub-Saharan Africa, 36 percent more unequal than East Asia and the Pacific, and 65 percent more unequal than the high-income countries (figure 1-1). However, after rising in the 1990s, inequality in Latin America declined between 2000 and 2007. Of the seventeen countries for which comparable data are available, twelve experienced a decline in their Gini coefficient (figure 1-2). The average decline for the twelve countries was 1.1 percent a...

  6. 2 Labor Earnings Inequality: The Demand for and Supply of Skills
    (pp. 25-38)
    JAIME KAHHAT

    The distribution of income in Latin American countries has experienced substantial change over the last two decades. Income inequality rose in most countries in Latin America in the 1990s, but that trend was reversed in the 2000s. One of the main factors explaining the changes in the distribution of income is changes in labor earnings inequality. As the case studies in this volume show, labor earnings inequality followed a trend similar to that of income inequality in most countries in the region, rising in the 1990s and then falling in the 2000s. This chapter discusses the main economic factors accounting...

  7. 3 The Political Economy of Redistributive Policies
    (pp. 39-71)
    JAMES A. ROBINSON

    Many factors influence the distribution of assets and income that a market economy generates, including the distribution of innate abilities, the nature of technology, and the types of market imperfections that determine investment opportunities and the distribution of human and physical capital.

    But any market system is embedded in a larger political system that, independently of the influence of the market, may either create or reduce inequalities of assets or incomes. The impact of the political system on distribution depends on the laws, institutions, and policies of that system. What institutions or policies a political system generates depends on the...

  8. 4 The Dynamics of Income Concentration in Developed and Developing Countries: A View from the Top
    (pp. 72-99)
    FACUNDO ALVAREDO and THOMAS PIKETTY

    The primary objective of this chapter is to summarize the trends in income concentration during the twentieth century for four groups of countries: Western English-speaking countries (United Kingdom, Ireland, United States, Canada, New Zealand, and Australia); continental European countries (France, Germany, Netherlands, and Switzerland) and Japan; Nordic and Southern European countries (Norway, Sweden, Finland, Spain, Italy, and Portugal); and developing countries (Argentina, China, India, Singapore, and Indonesia).¹ Did income distribution become more unequal or more equal over the course of the years? When did income inequality increase, and when did it decrease? What income fractiles were most affected? What differences...

  9. 5 A Distribution in Motion: The Case of Argentina
    (pp. 100-133)
    LEONARDO GASPARINI and GUILLERMO CRUCES

    All of the available empirical evidence suggests that income inequality in Argentina substantially increased from the mid-1970s to the mid-2000s. Figure 5-1 presents a summary of this disappointing story: the Gini coefficient of the distribution of household per capita income for Greater Buenos Aires (GBA) soared from 0.344 in 1974 to 0.487 in 2006.¹ Inequality did not increase at a uniform rate over time, however. Figure 5-2 depicts short intervals of relative calm as well as intervals of surges in inequality.² Although an inequality series from the mid-1970s can be estimated only for Greater Buenos Aires, which contains roughly one-third...

  10. 6 Markets, the State, and the Dynamics of Inequality in Brazil
    (pp. 134-174)
    RICARDO BARROS, MIRELA DE CARVALHO, SAMUEL FRANCO and ROSANE MENDONÇA

    Brazilian income inequality has been the subject of a large number of studies¹ that for more than four decades have shown that Brazil has an extremely high and persistent level of inequality: in 2007, the income shares of Brazil’s poorest and richest 10 percent were equal to .9 and 43.5 percent, respectively.² However, between 2001 and 2007, the country experienced a sharp and continuous decline in income inequality: the Gini coefficient declined at an average rate of 1.2 percent a year and in 2007, income inequality reached its lowest level in more than 30 years (figure 6-1).³

    This reduction in...

  11. 7 Mexico: A Decade of Falling Inequality: Market Forces or State Action?
    (pp. 175-217)
    GERARDO ESQUIVEL, NORA LUSTIG and JOHN SCOTT

    Mexico is among the most unequal countries in the world.¹ However, it is making progress in becoming less unequal: from 1996 to 2006, Mexico’s Gini coefficient fell from 0.543 to 0.498 (or by 0.8 percent a year),² and from 2000 to 2006 it fell by 1 percent a year.³ The decline in inequality coincided with important changes in Mexico’s economic and social policy. In 1994, the North American Free Trade Agreement (NAFTA) with the United States and Canada went into effect, thereby establishing the largest free trade area in the world—and the most asymmetrical in terms of the countries’...

  12. 8 Inequality in Post–Structural Reform Peru: The Role of Market Forces and Public Policy
    (pp. 218-244)
    MIGUEL JARAMILLO and JAIME SAAVEDRA

    In 1940, according to census data, 57 percent of Peruvians more than 15 years of age had never gone to school at all and less than 5 percent had gone beyond primary school (Peru 1944). In 1961, prior to the agrarian reform of the late 1960s, the Gini coefficient for land concentration was 0.94 (Escobal, Saavedra, and Torero 1998). Participation in electoral processes was below 10 percent of the total population in 1939 (Jaramillo and Saavedra 2005). With those figures in mind, we can characterize the changes that came in the last half of the twentieth century as no less...

  13. Contributors
    (pp. 245-246)
  14. Index
    (pp. 247-253)
  15. Back Matter
    (pp. 254-254)