Income Inequality in Bolivia, Colombia, and Ecuador: Different Reasons

23 Pages Posted: 4 Sep 2015

See all articles by María Aristizábal-Ramírez

María Aristizábal-Ramírez

Universidad EAFIT

Gustavo J. Canavire-Bacarreza

Inter-American Development Bank (IDB); IZA Institute of Labor Economics

Michael Jetter

University of Western Australia; IZA

Abstract

This paper analyzes the individual-level determinants of wage inequality for Bolivia, Colombia, and Ecuador from 2001 to 2010. Using a rich annual data set from surveys in all three countries, we analyze wages both using conventional wage regressions and decompositions of standard Gini indices. Although popular opinion and standard Gini indices suggest Colombia to exhibit the most unequal distribution of income among these countries, our results suggest otherwise. If one assumes educational attainment to form part of one's own responsibility the Colombian income distribution appears more equal than Bolivia's or Ecuador's. In 2010, educational achievement explains over 10.9 percent of the Gini score in Colombia, 6.3 percent in Ecuador, and a mere 2.4 percent in Bolivia. Our findings show that the sources of income inequality can differ substantially across countries. Respective policy prescriptions should differ accordingly.

Keywords: income inequality, Gini coefficient, unfair inequality

JEL Classification: D31, D63, J31

Suggested Citation

Aristizábal-Ramírez, María and Canavire Bacarreza, Gustavo Javier and Jetter, Michael, Income Inequality in Bolivia, Colombia, and Ecuador: Different Reasons. IZA Discussion Paper No. 9210. Available at SSRN: https://ssrn.com/abstract=2655159

María Aristizábal-Ramírez (Contact Author)

Universidad EAFIT ( email )

Carrera 49 N° 7 sur – 50
Bogotá, Antioquia 00000
Colombia

Gustavo Javier Canavire Bacarreza

Inter-American Development Bank (IDB) ( email )

1300 New York Avenue NW
Washington, DC 20577
United States

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Michael Jetter

University of Western Australia ( email )

35 Stirling Highway
Crawley, Western Australia 6009
AUSTRALIA

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