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UNU-WIDER WP/2012/09 Inequality Trends and their Determinants: Latin America over 1990-2010

Support functions

A teenager wears torn rubber boots in a muddy local market in Bac Ha, Viet Nam. As of 2005 figures, half the world population—more than 3 billion people–is estimated to live on less than USD 2.50 a day. Bac Ha, Viet Nam. UN Photo/Kibae Park.

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WP/009 Inequality Trends and their Determinants: Latin America over 1990-2010

The paper reviews the steady and widespread decline in income inequality which has taken place in most of Latin America over 2002-10 and which––if continued for another 2-3 years––would reduce the average regional income inequality to pre-liberalization levels. The paper then focuses on the factors, which may explain such inequality decline. A review of the literature and an econometric test indicate that a few complementary factors played an important role in this regard, including a drop in the skill premium following a rapid expansion of secondary education, and the adoption of a new development model by a growing number of left-of-centre governments which emphasizes fiscally-prudent but more equitable macroeconomic, tax, social expenditure and labour policies. For the region as a whole, improvements in terms of trade, migrant remittances, FDI and world growth playeda less important role than expected although their impact was perceptible in countries where such transactions were sizeable.
WIDER Working Paper
WP/009 Inequality Trends and their Determinants: Latin America over 1990-2010
Giovanni Andrea Cornia
Publication date:
January 2012
ISBN 13 Web:
Copyright holder:
Copyright year:
income inequality, human capital inequality, policy regimes, external conditions, Latin America
D31, E6, H53, I28, I38
The New Policy Model, Inequality and Poverty in Latin America: Evidence from the Last Decade and Prospects for the Future
UNU-WIDER gratefully acknowledges the financial contributions to the research programme by the governments of Denmark (Ministry of Foreign Affairs), Finland (Ministry for Foreign Affairs), Sweden (Swedish International Development Cooperation Agency—Sida) and the United Kingdom (Department for International Development).

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