Inequality Stagnation in Latin America in the Aftermath of the Global Financial Crisis

40 Pages Posted: 20 Apr 2016

See all articles by Louise Cord

Louise Cord

World Bank

Oscar Barriga Cabanillas

World Bank; University of California, Davis

Leonardo Lucchetti

World Bank

Carlos Rodríguez-Castelán

World Bank

Liliana Sousa

World Bank

Daniel Valderrama

World Bank

Multiple version iconThere are 2 versions of this paper

Date Written: December 1, 2014

Abstract

Over the past decade (2003-12), Latin America has experienced strong income growth and a notable reduction in income inequality, with the region's Gini coefficient falling from 55.6 to 51.8. Previous studies have warned about the sustainability of such a decline, and this paper presents evidence of stagnation in the pace of reduction of income inequality in Latin America since 2010. This phenomenon of stagnation is robust to different measures of inequality and is largely attributable to the impact of the Global Financial Crisis on Mexico and Central America, where inequality rose after 2010 as labor income recovered. Moreover, this paper finds evidence that much of the continuation of inequality reduction after the crisis at the country level has been due to negative or zero income growth for households in the top of the income distribution, and lower growth of the incomes of the poorest households. The crisis also highlighted weaknesses in the region's labor markets and the heavy reliance on public transfers to redistribute, underscoring the vulnerability of the region's recent social gains to global economic conditions.

Keywords: Equity and Development, Employment and Shared Growth, Industrial Economics, Economic Theory & Research, Economic Growth, Inequality, Social Protections & Assistance, Achieving Shared Growth, Economic Conditions and Volatility, Pro-Poor Growth

Suggested Citation

Cord, Louise and Cabanillas, Oscar Barriga and Cabanillas, Oscar Barriga and Lucchetti, Leonardo and Rodriguez-Castelan, Carlos and Sousa, Liliana and Valderrama, Daniel, Inequality Stagnation in Latin America in the Aftermath of the Global Financial Crisis (December 1, 2014). World Bank Policy Research Working Paper No. 7146, Available at SSRN: https://ssrn.com/abstract=2543700

Louise Cord (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Oscar Barriga Cabanillas

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

University of California, Davis ( email )

One Shields Avenue
Apt 153
Davis, CA 95616
United States

Leonardo Lucchetti

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Carlos Rodriguez-Castelan

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Liliana Sousa

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Daniel Valderrama

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
64
Abstract Views
941
rank
428,997
PlumX Metrics