Inequalities in Latin America: Trends and implications for Policy

Monica Brezzi () and Luiz de Mello
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Monica Brezzi: Council of Europe Development Bank

Hacienda Pública Española / Review of Public Economics, 2016, vol. 219, issue 4, 93-120

Abstract: A growing empirical literature has focused on the drivers of the remarkable reduction, albeit from comparatively high levels, in income disparities in the vast majority of Latin American countries since the 1990s. This is unlike most other parts of the world, including the OECD area, where income inequality has actually been rising. This improvement in the distribution of income has contributed to a reduction in the incidence of poverty in the region, although vulnerable groups face the risk of falling back into poverty if the economic environment deteriorates. Structural factors, such as a reduction in skill premia and labour income gains at the lower end of the income distribution, coupled with increased government spending on redistributive programmes, have been the main drivers of the reduction in inequality. Short-term, cyclical factors, including GDP growth and sizeable terms-of-trade gains in the resource-based economies, have played a relatively smaller role. Importantly, inequalities have also narrowed in non-income outcomes, such as educational attainment, the health status of the population and employment, which matter for people’s wellbeing.

Keywords: income distribution; poverty; Latin America (search for similar items in EconPapers)
JEL-codes: D30 D60 I30 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (1)

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