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Deconstructing the Decline in Inequality in Latin America

Nora Lustig (), Luis Lopez-Calva () and Eduardo Ortiz-Juarez ()

No 1314, Working Papers from Tulane University, Department of Economics

Abstract: Inequality in Latin America unambiguously declined in the 2000s. The Gini coefficient fell in 14 of the 17 countries where there is comparable data, and the change was statistically significant for all of them. Existing studies point to two main explanations for the decline in inequality: a reduction in hourly labor income inequality, and more robust and progressive government transfers. Available evidence suggests that it is the skill premium--or, more precisely, the returns to primary, secondary and tertiary education vs. no schooling or incomplete primary schooling--that drives the decline in hourly labor income inequality. The causes behind the decline in returns to schooling, however, have not been unambiguously established. Some studies find that returns fell because of an increase in the supply of workers with more educational attainment; others, because of a shift in demand away from skilled-labor.

Keywords: inequality; skill premium; government transfers; Latin America (search for similar items in EconPapers)
JEL-codes: D31 I24 H53 O15 O54 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev, nep-lam and nep-ltv
Date: 2013-04
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http://repec.tulane.edu/RePEc/pdf/tul1314.pdf First Version, April 2013 (application/pdf)

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