Thinking about inequality in Latin America in times of commodity booms and pandemics

Diego Sánchez-Ancochea

Chapter 6 in Economic Development, Economic Growth and Income Distribution, 2025, pp 106-124 from Edward Elgar Publishing

Abstract: This chapter explores the determinants of the decline in inequality observed in Latin America during the 2000s. The decline coincided with the commodity boom that characterized this period. The chapter focuses on the role played by macro-structural determinants and finds that the decline in inequality resulted primarily from changes in the labor market: the reduction in unemployment, the expansion of the formal sector, and the growth of salaries at the bottom. While education upgrading contributed to reducing the wage gap (through the expansion of the relative supply of workers who had completed high school), it was not the driving force. Demand-side forces appear to be the prominent underlying factor. One of the channels was the increased demand for low-skilled workers associated with the commodity boom. For the 2010s, the chapter presents some evidence that the distribution gains stagnated for the region as a whole, even if we observe significant variance within countries. There is also evidence that inequality increased during the COVID-19 pandemic even in some of the most successful countries.

Keywords: Inequality; Commodity booms; Macro-structural determinants; Pandemic; Latin America (search for similar items in EconPapers)
Date: 2025
ISBN: 9781803929903
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