Market Conditioning, Redistribution and Income Inequality in Latin America and the Caribbean

37 Pages Posted: 3 Aug 2011

See all articles by Nathan J. Kelly

Nathan J. Kelly

University of Tennessee, Knoxville

Jana Morgan

University of Tennessee, Knoxville

Date Written: August 2, 2011

Abstract

This article analyzes Latin American and Caribbean income inequality, making three important contributions. First, we show that politics not only shapes redistribution, but also affects inequality produced by the market, with much of the effect occurring through the market conditioning mechanism. Second, multiple facets of politics impact inequality, including partisan power, social spending, and regime type. Third, politics shapes how economic conditions influence inequality. Specifically, economic growth is equity-enhancing where social spending is high, but equity-reducing where such spending is low. We reach these conclusions based on a time series cross sectional analysis of nearly 200 country-years from 19 Latin American and Caribbean countries.

Keywords: Income inequality, redistribution, political economy, public policy, Latin America

JEL Classification: D31, H51, H52, H53, O54

Suggested Citation

Kelly, Nathan J. and Morgan, Jana, Market Conditioning, Redistribution and Income Inequality in Latin America and the Caribbean (August 2, 2011). Available at SSRN: https://ssrn.com/abstract=1903877 or http://dx.doi.org/10.2139/ssrn.1903877

Nathan J. Kelly (Contact Author)

University of Tennessee, Knoxville ( email )

The Boyd Center for Business and Economic Research
Knoxville, TN 37996
United States

Jana Morgan

University of Tennessee, Knoxville ( email )

1001 McClung Tower
Knoxville, TN 37996-0410
United States

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