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

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.

Bibliographic Details

Main Authors:	Barriga Cabanillas, Oscar, Cord, Louise, Lucchetti, Leonardo, Rodriguez Castelan, Carlos, Valderrama, Daniel, Sousa, Liliana D.
Language:	English en_US
Published:	World Bank Group, Washington, DC 2014-12
Subjects:	ACCESS TO EDUCATION, AGRICULTURAL EMPLOYMENT, ANDEAN REGION, ANNUAL CHANGE, ANNUAL GROWTH, ANNUAL RATE, AVERAGE ANNUAL, AVERAGE GROWTH, AVERAGE GROWTH RATE, AVERAGE INCOME, CASH TRANSFERS, CHANGES IN POVERTY, COUNTRY LEVEL, DECLINE IN POVERTY, DECLINING INEQUALITY, DECOMPOSITION RESULTS, DECREASING INEQUALITY, DEVELOPMENT ECONOMICS, DISTRIBUTION OF INCOME, DISTRIBUTIONAL IMPACT, DIVERSIFICATION, ECONOMIC GROWTH, ECONOMIC INEQUALITY, ELASTICITY, ELASTICITY OF POVERTY, EQUALIZING EFFECT, EQUALIZING IMPACT, EXTERNAL SHOCKS, FACTOR COMPONENTS, FINANCIAL CRISIS, GDP, GINI COEFFICIENT, GINI COEFFICIENTS, GROWTH ELASTICITY, GROWTH RATES, HIGH GROWTH, HOUSEHOLD INCOME, HOUSEHOLD PER CAPITA INCOME, HOUSEHOLD SURVEY DATA, HOUSEHOLD SURVEYS, HOUSING, HUMAN CAPITAL, HUMAN CAPITAL FORMATION, INCOME, INCOME DATA, INCOME DIFFERENCES, INCOME DISTRIBUTION, INCOME DISTRIBUTIONS, INCOME GROWTH, INCOME INEQUALITY, INCOME QUINTILES, INCOME SOURCE, INCOME SOURCES, INCOME TRENDS, INCOMES, INCREASE INCOME INEQUALITY, INCREASED INEQUALITY, INEQUALITY, INEQUALITY CHANGES, INEQUALITY FRONT, INEQUALITY INDICATORS, INEQUALITY LEVELS, INEQUALITY MEASURE, INEQUALITY MEASURES, INEQUALITY REDUCTION, INEQUALITY TRENDS, INTRAREGIONAL MIGRATION, JOB CREATION, LABOR DEMAND, LABOR INCOME, LABOR INCOMES, LABOR MARKET, LABOR MARKETS, LOG INCOME, LOGARITHMIC SCALE, MEAN LOG DEVIATION, MEASURING INEQUALITY, MIDDLE CLASS, MIDDLE INCOME, MIDDLE INCOME COUNTRIES, NEGATIVE GROWTH, NEGATIVE IMPACT, NEGATIVE VALUE, PENSION INCOME, PENSIONS, PER CAPITA GROWTH, PER CAPITA GROWTH RATE, PER CAPITA INCOME, POLICY DISCUSSIONS, POLICY RESEARCH, POLITICAL ECONOMY, POOR, POOR GROWTH, POSITIVE VALUE, POVERTY IMPACT, POVERTY LEVELS, POVERTY MEASURES, POVERTY REDUCTION, PRIMARY EDUCATION, PRIVATE TRANSFERS, PROGRAMS, PUBLIC POLICY, PUBLIC TRANSFERS, QUALITY OF LIFE, REAL PER CAPITA INCOME, REAL WAGES, REDUCING INEQUALITY, REDUCING POVERTY, REDUCTION OF INCOME, REDUCTION OF INEQUALITY, REGIONAL ECONOMIES, REGIONAL GROWTH, REGIONAL HARMONIZATION, REGIONAL INCOME, REGIONAL INCOME INEQUALITY, REGIONAL INEQUALITY, REGIONAL PATTERN, REGIONAL REPORT, REGIONAL TRADE, REGIONAL TRADE AGREEMENTS, REGIONAL TRENDS, RISING INEQUALITY, SCHOOLING, SELF-EMPLOYMENT, SKILL PREMIUM, SKILL WORKERS, SKILLED LABOR, SKILLED WORKERS, SOCIAL POLICY, SOCIAL PROGRAMS, SOCIAL PROTECTION, SOCIAL SPENDING, SUB-REGION, SUB-REGIONS, SUBREGIONS, TARGETING, TRANSFER PROGRAMS, VULNERABLE HOUSEHOLDS, WAGE, WAGE EMPLOYMENT, WAGE GROWTH, WAGE INEQUALITY,
Online Access:	http://documents.worldbank.org/curated/en/2014/12/23117484/inequality-stagnation-latin-america-aftermath-global-financial-crisis https://hdl.handle.net/10986/21141
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