Income Inequality in Latin America
Recent Decline and Prospects for Its Further Reduction
The paper reviews the extent of the income inequality decline that took place in Latin America in 2002-10 and then focuses on the factors that may explain such decline. These include a lowered skill premium following an expansion of secondary education among the poor, and the adoption of more equalizing tax, labour market subsidies and macro policies by a growing number of progressive governments. Finally, the paper reviews the changes in inequality during 2009-12 and discusses whether and how the recent decline can be sustained over the next decade in the context of sluggish world growth.