Economic Growth and Inequality: Evidence from the Young Democracies of South America

Manoel Bittencourt ()

No 201301, Working Papers from University of Pretoria, Department of Economics

Abstract: We investigate in this paper whether income growth has played any role on inequality in all nine young South American democracies during the period 1970-2007. The results, based on dynamic panel time-series analysis, robustly suggest that income growth has indeed played a progressive role in reducing inequality during the period. Moreover, the results suggest that this negative relationship is even stronger in the 1990s and early 2000s, a period in which the continent achieved macroeconomic stabilisation, political consolidation and much improved economic performance. On the contrary, during the 1980s (the so-called "lost decade"), the negative income growth experienced by the continent at the time has hit the poor the hardest, or alternatively speaking, it has played a regressive role on inequality. All in all, we suggest that consistent growth, and all that it encompasses, is an important equaliser which should not be discarded as a serious option by policy makers interested in a more equal income distribution.

Keywords: Growth; inequality; South America (search for similar items in EconPapers)
JEL-codes: E20 O11 O15 O54 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2013-01
New Economics Papers: this item is included in nep-lam, nep-mac, nep-pbe and nep-pol
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Chapter: Economic Growth and Inequality: Evidence from the Young Democracies of South America (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:pre:wpaper:201301

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