Decomposing the recent inequality decline in Latin America

By João Pedro Azevedo, Gabriela Inchauste, Viviane Sanfelice. 2013

117 citations recorded by the source corpus.

Over the past decade, 12 of 14 Latin American countries have experienced a reduction in inequality. Based on a series of counterfactual simulations, the observed changes in inequality are decomposed in order to identify the main determinants of inequality. In contrast to methods that focus on aggregate summary statistics, the method adopted in this paper generates counterfactual distributions, so that the analysis can account for changes related to demographics, occupation, labor earnings and transfers, pensions, and other nonlabor income sources. The results show that for the majority of countries in the sample, the most important contributor to the observed decline in inequality has been the relatively strong growth in labor earnings at the bottom of the income distribution. In particular, most of the reduction in inequality can be attributed to an increase in earnings per hour for the bottom of the income distribution. The paper also contributes to the literature on inequality in Latin America by providing the Shapley-Shorrocks value of this decomposition.

Subfields: Economics and Econometrics, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/1df2454a2c62ebd2199156831ea611ab911669a3

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In Economics and Econometrics

1. Leonardo Gasparini
2. Sebastian Galiani
3. Guillermo Cruces
4. Pablo A. Acosta
5. Nora Lustig

In Sociology and Political Science

1. Sebastian Galiani
2. Guillermo Cruces
3. Pablo A. Acosta
4. Leonardo Gasparini
5. C. Cattaneo
6. Humberto López

Citations in the corpus

• Educational Upgrading and Returns to Skills in Latin America: Evidence from a Supply-Demand Framework, 1990-2010 (2011, background): “4 two decades has been widely documented and discussed in other studies (e.g. LópezCalva and Lustig, 2010; Gasparini et al., 2011; Gasparini and Lustig, 2011; Azevedo et al., 2012; Cord et al., 2017).”
• Deconstructing the decline in inequality in Latin America (2013, unknown): “…of the nonparametric decomposition method developed by Barros et al. (2006) to quantify the contributions to observed distributional changes,5 Azevedo et al. (2012) explore whether the recent decline in income inequality is the result of changes in demographics, earnings and employment, or…”