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The Income Distribution Threat in Latin America

Published online by Cambridge University Press:  05 October 2022

Albert Berry
Albert Berry*
Affiliation:
University of Toronto
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Most of the Latin American countries that have introduced market-friendly economic reforms during the course of the last two decades have also suffered serious increases in inequality. The systematic coincidence in timing of the two events suggests that the reforms have been one cause of the worsening distribution. The generalization that major increases in inequality have occurred in many Latin American countries over the last two decades is now widely accepted (Altimir 1994; Morley 1995). This article will add new information for a few countries (Colombia, Costa Rica, and Ecuador). Its main focus, however, is the possible causes of those increases, a complicated question because so many different currents have affected the region over this period—the economic crisis, the policy reforms, technological change, shifts in terms of trade, and still others. Samuel Morley (1995) and others have argued that much of the observed increase in inequality was related to the economic crises suffered by nearly every country in the region. This interpretation might suggest that the optimists who predicted positive distributional outcomes from the reforms (such as Krueger 1988) will eventually be vindicated, once the negative effects of the crises have played themselves out. Although I agree that this factor played a significant role, the fact that inequality appears to be significantly higher after the crisis than before (Altimir 1994) implies that other contributing factors were also at work. Of these, the reforms are suspect because of their content and implicated by the coincidences in timing with the increases.

Type
Research Article
Information
Latin American Research Review , Volume 32 , Issue 2 , 1997 , pp. 3 - 40
Copyright
Copyright © 1997 by the University of Texas Press

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