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Fiscal Policy and Ethno-Racial Inequality in Bolivia, Brazil, Guatemala and Uruguay

Nora Lustig ()

No 22, Commitment to Equity (CEQ) Working Paper Series from Tulane University, Department of Economics

Abstract: African descendants and indigenous peoples in Latin America face higher poverty rates and are disproportionately represented among the poor. Per capita income of the white population can be sixty percent higher to twice as high as the per capita income of the African descendant and indigenous populations. Using comparable fiscal incidence analyses for Bolivia, Brazil, Guatemala and Uruguay, I analyze how much poverty and inequality change after fiscal interventions. I also propose a set of indicators for measuring how progressive and pro-indigenous or pro-African descendant government intervention is in ethno-racial dimensions. Based on these indicators, I explore which elements of tax and transfer systems within each country specifically contribute to narrowing or increasing existing ethno-racial gaps. The ratio of average per capita incomes by ethnicity or race declines by at most one decimal point (Bolivia, Brazil and Uruguay) to nothing (Guatemala). In Brazil and Uruguay, where there is a respectable decline in overall inequality, the decline in inequality between different ethno-racial groups still does not decline significantly, changing by a very small amount in Uruguay and actually increasing in Brazil.

Keywords: fiscal incidence; inequality; poverty; taxes; social spending; race; ethnicity; Latin America (search for similar items in EconPapers)
JEL-codes: H22 I3 O1 (search for similar items in EconPapers)
Date: 2015-01
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Published in Commitment to Equity, January 2015, pages 1-35

Downloads: (external link) First version, 2015 (application/pdf)

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