Was Falling Inequality in All Latin American Countries a Data-Driven Illusion? Income Distribution and Mobility Patterns in Uruguay 2009-2016

Abstract

To contribute to the debate on the recent inequality fall in Latin America, we provide evidence on the primary income distribution in Uruguay for 2009-2016 and assess mobility patterns. Comparing household surveys micro-data and a unique array of matched personal-firm income tax records, we find that trends are sensitive to the data source and inequality measure. Gini and Theil indices decreased, with a milder fall in tax records than in household surveys. Whereas in tax records synthetic indices fell within the bottom 99% offsetting increased concentration at the top, in household surveys the largest reduction occurred at the top. In turn, tax records estimates of top 1% income shares remained steady at around 15%, but decreased in household surveys throughout the whole period. Moreover, top income positions were stable, with average persistence rates at the top 1% close to 80%. Meanwhile, the equalizing effect of income mobility was very modest.

Keywords: top incomes, income inequality, mobility, personal income taxation, tax records, Uruguay

JEL Classification: D31, H24, O54