Deconstructing the Decline in Inequality in Latin America

18 Pages Posted: 20 Apr 2016

See all articles by Nora Lustig

Nora Lustig

Tulane University

Luis Felipe López-Calva

World Bank

Eduardo Ortiz-Juarez

UNDP - Regional Bureau for Latin America and the Caribbean

Date Written: July 1, 2013

Abstract

Inequality in Latin America unambiguously declined in the 2000s. The Gini coefficient fell in 16 of the 17 countries where there are 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, Poverty Impact Evaluation, Labor Markets, Population Policies, Labor Policies

Suggested Citation

Lustig, Nora Claudia and Lopez-Calva, Luis Felipe and Ortiz-Juarez, Eduardo, Deconstructing the Decline in Inequality in Latin America (July 1, 2013). World Bank Policy Research Working Paper No. 6552. Available at SSRN: https://ssrn.com/abstract=2304715

Nora Claudia Lustig (Contact Author)

Tulane University ( email )

6823 St Charles Ave
New Orleans, LA 70118
United States

Luis Felipe Lopez-Calva

World Bank ( email )

1818 H Street NW
Washington, DC 20433
United States

Eduardo Ortiz-Juarez

UNDP - Regional Bureau for Latin America and the Caribbean ( email )

One United Nations Plaza
New York, NY 10017
United States
2129065892 (Phone)

HOME PAGE: http://www.undp.org/rblac/

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