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Inequalities in Latin America: Trends and implications for Policy

Author

Listed:
  • Monica Brezzi

    (Council of Europe Development Bank)

  • Luiz de Mello

    (OECD)

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.

Suggested Citation

  • Monica Brezzi & Luiz de Mello, 2016. "Inequalities in Latin America: Trends and implications for Policy," Hacienda Pública Española / Review of Public Economics, IEF, vol. 219(4), pages 93-120, December.
    • Handle: RePEc:hpe:journl:y:2016:v:219:i:4:p:93-120
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    References listed on IDEAS

    as
    1. Luiz de Mello & Naércio Menezes Filho & Luiz G. Scorzafave, 2006. "Improving Labour Utilisation in Brazil," OECD Economics Department Working Papers 533, OECD Publishing.
    2. Gabriel Burdin & Fernando Esponda & Andrea Vigorito, 2004. "Inequality and Top Income in Uruguay: A Comparison between Household Surveys and Income Tax Micro-data," Working Papers halshs-02654095, HAL.
    3. Nora Lustig & Carola Pessino & John Scott, 2013. "The Impact of Taxes and Social Spending on Inequality and Poverty in Argentina, Bolivia, Brazil, Mexico, Peru and Uruguay: An Overview," Working Papers 1313, Tulane University, Department of Economics.
    4. Goñi, Edwin & Humberto López, J. & Servén, Luis, 2011. "Fiscal Redistribution and Income Inequality in Latin America," World Development, Elsevier, vol. 39(9), pages 1558-1569, September.
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    6. Luiz De Mello & Diego Moccero, 2009. "Monetary Policy and Inflation Expectations in Latin America: Long-Run Effects and Volatility Spillovers," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(8), pages 1671-1690, December.
    7. Rodrigo Cubero & Ivanna Vladkova Hollar, 2010. "Equity and Fiscal Policy: The Income Distribution Effects of Taxation and Social Spending in Central America," IMF Working Papers 2010/112, International Monetary Fund.
    8. Azevedo, Joao Pedro & Inchauste, Gabriela & Sanfelice, Viviane, 2013. "Decomposing the recent inequality decline in Latin America," Policy Research Working Paper Series 6715, The World Bank.
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    10. Azevedo, Joao Pedro & Davalos, Maria Eugenia & Diaz-Bonilla, Carolina & Atuesta, Bernardo & Castaneda, Raul Andres, 2013. "Fifteen years of inequality in Latin America : how have labor markets helped ?," Policy Research Working Paper Series 6384, The World Bank.
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    Cited by:

    1. Sanjeev Gupta & João Tovar Jalles, 2020. "Tax Revenue Reforms and Income Distribution in Developing Countries," Working Papers REM 2020/0137, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.

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    More about this item

    Keywords

    income distribution; poverty; Latin America;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General

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