THE DECLINE IN INEQUALITY IN LATIN AMERICA: Policies, Politics or Luck?

By Lustig, Nora | Americas Quarterly, Fall 2011 | Go to article overview

THE DECLINE IN INEQUALITY IN LATIN AMERICA: Policies, Politics or Luck?


Lustig, Nora, Americas Quarterly


While real, the recent gains in income equality remain fragile. Sustaining the trend will require some tough policies before the luck runs out.

Latin America has been basking in good news lately. High growth, combined with an unusual resilience to the global fi nancial crisis, has contrasted sharply with events in Europe and the United States. Even the countries hardest hit by the crisis have managed quite well.

Another piece of good news has received less attention. Income inequality in the region has declined in 13 out of 17 countries for which comparable data exist. After rising in the 1990s, inequality in Latin America declined by nearly 1 percent per year between 2000 and 2009 [see figure, p.44].

More impressively, this decline has occurred even as inequality has grown in China, India, South Africa, and most advanced countries. To a large extent, inequality in Latin America has always been the result of state capture on the part of predatory elites, inequality of opportunities, lack of access to credit for the poor, and discrimination against nonwhites and women. This means the observed fall is good news both in terms of fairness and overall effi ciency.

Has the decline in inequality been the result of policies, politics or luck? The answer is a bit of all three.

Shifts in Politics, Policy, Demographics, and Global Demand

Two major factors account for the decline in Latin America's inequality: the wage gap between skilled and lowskilled workers has narrowed and governments' social policies have become more pro poor. The decline in the wage gap occurred, in part, because of the expansion of basic education during the past two decades. Emphasis on universal coverage of basic education (both primary and the fi rst three years of high school) and cash transfer programs targeted to the poor have been unambiguous moves toward pro-poor public spending.

In the 2000s, there was a signifi cant rise in the importance of government transfers to the poor. This had the effect of increasing public distribution to those sectors. Large-scale conditional cash transfer (CCT) programs such as Bolsa Familia (Brazil) and Progresa/ Oportunidades (Mexico) had remarkable redistributive power. These programs are a small share of total government social spending, but go a long way in terms of redistributing income to the bottom of the income scale. Bolsa Familia reaches around 11 million families and Oportunidades about 5 million. Their cost (including administrative costs), however, is below 0.5 percent of GDP.

In some countries, increases in the minimum wage and union-friendly governments have contributed as well.

What about the political dynamics behind pro-poor government spending? The fi rst large-scale CCT program, Progresa (later called Oportunidades), began in Mexico in the late 1990s and spread to other countries later in that decade and in the 2000s. Its launch could be seen as part of a democratization process that shifted political power away from corporatist groups, like labor unions, toward rural voters.

Redistributive programs are more likely to be introduced where their poor benefi ciaries have become politically vocal and organized. Bolsa Familia was instituted nationwide after Luiz Inácio Lula da Silva, leader of the Partido dos Trabalhadores (PT)-a political party whose support comes from the rural and urban poor-won the 2000 presidential election.

In Bolivia, redistribution policies took hold in 2005 when the rural party movement, Movimiento al Socialismo (MAS), led to the election of Evo Morales as president. Largescale redistributive programs in Argentina became pervasive after the Kirchners (fi rst Nestor and then Cristina Fernández) were elected by voters from the ranks of the unemployed, the impoverished working class and the disempowered. Although inequality declined in countries governed by both leftist and non-leftist regimes, leftist governments in general have been more redistributive than the nonleft. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

THE DECLINE IN INEQUALITY IN LATIN AMERICA: Policies, Politics or Luck?
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.