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Income Distribution under Latin America's New Left Regimes

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  • Giovanni Andrea Cornia

Abstract

This paper reviews the decline in income inequality that has taken place over 2002-2007 in most Latin American countries against the background of its steady increase over 1980-2002. The paper then analyzes the factors that could explain this trend reversal. It focuses in particular on favorable external conditions, cyclical factors, improvements in the distribution of educational achievements and the subsequent drop in skill-premium, and changes in macro-economic and social policies introduced in several countries, particularly by a growing number of left-of-center governments that have come to power during the past decade. An econometric test for the years 1990-2007 using a sample of countries covering the majority of the population in the region indicates that, in addition to a favorable business cycle and external conditions, a decline in skill premium and the new policy model of fiscally prudent social-democracy that is emerging this decade in much of Latin America impacted favorably the distribution of income. If this approach will survive the current crisis, much of the recent inequality decline is likely to become permanent.

Suggested Citation

  • Giovanni Andrea Cornia, 2010. "Income Distribution under Latin America's New Left Regimes," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 11(1), pages 85-114.
    • Handle: RePEc:taf:jhudca:v:11:y:2010:i:1:p:85-114
    DOI: 10.1080/19452820903481483
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    1. Bouillon, César P. & Tejerina, Luis, 2006. "Do We Know What Works?: A Systematic Review of Impact Evaluations of Social Programs in Latin America and the Caribbean," IDB Publications (Working Papers) 2801, Inter-American Development Bank.
    2. -, 2007. "Preliminary Overview of the Economies of Latin America and the Caribbean 2007," Balance Preliminar de las Economías de América Latina y el Caribe, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 969 edited by Eclac.
    3. Esteban Pérez Caldentey & Matías Vernengo, 2010. "Back to the future: Latin America's current development strategy," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 32(4), pages 623-644, July.
    4. Stephan Klasen & Felicitas Nowak-Lehmann (ed.), 2009. "Poverty, Inequality, and Policy in Latin America," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262113244, April.
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    More about this item

    Keywords

    Income inequality; Terms of trade; Policy regimes; Latin America;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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