Schooling Inequality, Crises, and Financial Liberalization in Latin America

25 Pages Posted: 23 Mar 2009

See all articles by Jere Behrman

Jere Behrman

University of Pennsylvania - Department of Economics

Nancy Birdsall

Center for Global Development

Gunilla Pettersson Gelander

Birk Consulting

Multiple version iconThere are 2 versions of this paper

Date Written: March 23, 2009

Abstract

Latin America is marked by high and persistent inequality in income, schooling, and land ownership. In such an unequal environment, the powerful are likely to dominate politics and push for policies that protect their privileges rather than foster competition and growth. As a result, changes in policies that political elites resist may be postponed to the detriment of overall economic performance. This paper examines the relationship between structural, high inequality-measured by high levels of schooling inequality - and liberalization of the financial sector for a sample of 37 developing and developed countries for the period from 1975 to 2000. Before 2000, liberalization of the financial sector in Latin American consisted of opening credit markets that had been largely restricted, including by ending directed credit. The authors find that increases in financial liberalization were associated with bank crises and other domestic and external shocks, and that higher schooling inequality reduces the impetus for liberalization brought on by bank crises.

Keywords: inequality, schooling inequality, financial liberalization, bank crisis, Latin America

JEL Classification: O1, O15, 016, O54, G15

Suggested Citation

Behrman, Jere R. and Birdsall, Nancy and Pettersson Gelander, Gunilla, Schooling Inequality, Crises, and Financial Liberalization in Latin America (March 23, 2009). Center for Global Development Working Paper No. 165. Available at SSRN: https://ssrn.com/abstract=1367217 or http://dx.doi.org/10.2139/ssrn.1367217

Jere R. Behrman

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States
215-898-7704 (Phone)
215-573-2057 (Fax)

Nancy Birdsall

Center for Global Development ( email )

2055 L St. NW
5th floor
Washington, DC 20036
United States
202-416-0700 (Phone)

Gunilla Pettersson Gelander (Contact Author)

Birk Consulting ( email )

Varberg
Sweden

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