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S lnequullLy ln LA
S lnLernuLlonul comurlson
S Lecllnlng lnequullLy ln LA:
owMuch?
SlnceWhen?
S Lecllnlng lnequullLy: Why?
S lulllng sklll remlu
S More rogresslve governmenL Lrunsfers
S CuveuL: Under-reorLlng of 1o lncomes und lnequullLy
1rends
S 1he luLure: Wlll (Meusured) lnequullLy ConLlnue Lo Lecllne?
32.2
33.6
38.9 38.9
39.1
44.7
53.2
20.0
25.0
30.0
35.0
40.0
45.0
50.0
55.0
60.0
High Income Europe and
CentraI Asia
South Asia North Africa
and the
MiddIe East
East Asia and
the Pacific
Sub-Saharan
Africa
Latin America
and the
Caribbean
G
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f
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think the data for Asia are not correct. Please look at ADB Key ndicators 2007. This has data on
Excess Inequa|ity (IOB, z)
#
Excess Poverty (IOB, z)
#
ou may wish to say that poverty in Asia (2.5 $) m in comparison to
LA - is much higher at around 40%, and MCs have higher poverty
Trends in Inequa|ity
Gini Coefficient Ear|y 's-Late z's
Light Grey: Countries with Fa||ing Ineq (Lustig et a|., z)
0.509
0.523
0.530
0.518
0.503
0.520
0.537
0.540
0.524
0.502
0.480
0.490
0.500
0.510
0.520
0.530
0.540
0.550
Early 90s
(12 countries)
Mid-90s
(15 countries)
Late 90s (16
countries)
Mid-2000s
(17 countries)
Late 2000s (17
countries)
am not clear what the
message in this figure
is
Trends in Poverty: -z (IOB, z)
nteresting: While in LA GDP/capita goes up and 2.5$ poverty down in Asia, GDP per capita goes up but $2
poverty remains stable and high at 40%. What does this mean for the inclusiveness of growth in both
regions?
S Inequa|ity in most Latin American countries
( out of )) has dec|ined (rough|y % a
year) between (circa) z and (circa) z
S Oec|ine is statistica||y significant
S Oec|ine continued through the g|oba|
financia| crisis in z
S
AOB's research on inequa|ity shows that this is different in Asia, where inequa|ities are
rising during the |ast years of economic growth
Change in Gini Coefficient by Country: circa
z-z (year|y change in percent)
-
1
.
2
3
-
1
.
0
7
-
1
.
0
7
-
0
.
6
6
0
.
1
2
-
0
.
7
8
-
1
.
2
9
-
0
.
9
7
-
0
.
7
7
-
0
.
3
9
0
.
7
9
-
0
.
5
3
-
1
.
5
-
1
.
0
-
0
.
5
0
.
0
0
.
5
1
.
0
Argentina
Brasil
Venezuela
Chile
Uruguay
LeIt-wing
El Salvador
Panama
Mexico
Peru
Honduras
Non-leIt
Iigure 8: Redistributive impact of changes in social spending budget share by quintile
(change significant at *S or **J level)
06**
081**
083**
008
26**
026
021
049*
044*
1S
029*
31* 033**
016
12*
1st u|nt||e 2nd u|nt||e 3rd u|nt||e 4th Sth u|nt||e
Source Append|x A 1ab|e A3 and McLeod and Lust|g (2011)
I|gure 24 ked|str|but|ve |mpact of changes |n soc|a| spend|ng
budget share by qu|nt||e (change s|gn|f|cant at *S or **1 |eve|)
Soc|a| Democrat|c
Left opu||st
Non|eft
Source: McLeod and Lustig ,2011,.
S In-depth ana|ysis in four countries:
Argentina (Gasparini and Cruces) (urban, zj
of pop)
Brazi| (Barros, Carva|ho, Mendoca 8 Franco)
Mexico (Esquive|, Lustig and 5cott)
Peru (1arami||o 8 5aavedra)
5ource: Lopez-Ca|va and Lustig (z)
z
z
S Representative samp|e of Latin
American diversity:
Shighjmediumj|ow ineq
Shighj|ow growth
SPopu|istjsocia| democraticjcenter-
center-right governments
zz
5amp|e Representative of High and Low Inequa|ity
Countries
(Latin America: Gini Coefficient by Country, circa z), in percent)
43.5
46.8
48.2
48.3
48.9
49.7 49.7
49.9
51.8
52.3
53.2
54.3 54.4
54.8 54.9
57.2
59.3
51.6
40
45
50
55
60
65
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z
S Argentina and Peru were growing at
around 6 percent a year since z
S Brazi| and Mexico were growing at |ess
than percent a year (Brazi|'s growth rate
picked up on|y from z onwards)
-5
-3
-1
1
3
5
7
9
11
13
15
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100
A
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a
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e
a
n
n
u
a
I
g
r
o
w
t
h
r
a
t
e
(
%
)
Distribution of countries (%)
Distribution of countries according to the average per capita GDP
growth rate between 1990 and 2005
BraziIian top 10%
BraziIian bottom 10%
China
Germany
Haiti
Income of the Brazi|ian poor has been growing as fast as per
capita GOP in China whi|e income of the richest ten percent has
been growing |ike Germany's per capita GOP
This is a very interesting graph
z#
4.1
3.8
3.3
3.1
2.8
2.6
2.3
2.2
1.8
0.6
2.7
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
1 2 3 4 5 6 7 8 9 10
#
a
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g
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o
w
t
h
(
i
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)
Decil
Household per capita income Ior each decile Average oI income per capita growth rates
S There are many different factors that affect the distribution of
income over time: . the evo|ution of the distribution of
income is the resu|t of many different effects~some of them
quite |arge~which may offset one another in who|e or in
part." (Bourguignon et a|., z)
S Usefu| framework: to consider the 'proximate' factors that
affect the distribution of income at the individua| and
househo|d |eve|:
. Oistribution of assets and persona| characteristics
z. Return to assets and characteristics
. Uti|ization of assets and characteristics
q. Transfers (private and pub|ic)
. 5ocio-demographic factors
z#
S Proportion of working adu|ts as a share of the tota| number of
adu|ts (and tota| househo|d members) rose, part|y |inked to the
sharp increase in fema|e |abor force participation:-z6 by
. p.pts in Mexico, q.z in Argentina, z. in Brazi| and . in
Peru.
Oependency ratios improved proportionate|y more
for |ow incomes.
Working adu|ts (except for Peru) became more
equa||y distributed (fema|e adu|ts participated
proportionate|y more for |ow incomes)
S Average years of schoo|ing rose faster for the bottom quinti|e
than for the top quinti|e.
=> Oistribution of education (human capita|)
became more equa| in a|| four countries
z
z
ousehold er culLu lncome und lLs deLermlnunLs
Per capita
househoId
income
Per capita
househoId
income
Proportion of aduIts in
the househoId
WERTILITY
Proportion of aduIts in
the househoId
WERTILITY
HousehoId
income per
aduIt
HousehoId
income per
aduIt
HousehoId non-Iabor
income per aduIt
WRENTS & PROITS
WREMITTANCES
WGOV. TRANSERS
HousehoId non-Iabor
income per aduIt
WRENTS & PROITS
WREMITTANCES
WGOV. TRANSERS
HousehoId
Iabor income
per aduIt
HousehoId
Iabor income
per aduIt
Proportion of working aduIts
WPARTICIPATION IN LABOR
ORCE
WEMPLOYMENT OPPORT
Proportion of working aduIts
WPARTICIPATION IN LABOR
ORCE
WEMPLOYMENT OPPORT
Labor income per working
aduIt in the househoId
WWAGES BY SKILL/OTHER
WHOURS WORKED
Labor income per working
aduIt in the househoId
WWAGES BY SKILL/OTHER
WHOURS WORKED
OEMOGRAPHIC
WMARkET
WPOLITIC5j
IN5T.
W5TATE
WOEMOGRAPHIC
WMARkET
WOEMOGRAPHIC
WMARkET
WPOLITIC5jIN5T.j
5OC. NORM5
W5TATE
(EOUCATION)
Main finding:
=> Oec|ine in |abor incme
(except for Peru at the househo|d
|eve|) and non-|abor income
inequa|ity important
determinants of the dec|ine in
overa|| income inequa|ity (in per
capita househo|d income)
igure 7.2: EvoIution of the wage differentiaI among metropoIitan regions and different
sized municipaIities: 1995-2006
6,1
18,4
10,4
10,1
10,7
12,9
11,0
9,4
9,3
6,2 6,4
4,5
5,6
30,2
29,5
32,0
28,0
26,0
25,7
23,0
20,7
17,1
19,3
15,4
14,5 14,5
13,3 13,2
13,1
13,6
11,8
10,7
11,4
0
5
10
15
20
25
30
35
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Years
D
i
f
f
e
r
e
n
t
i
a
I
(
%
)
DifferentiaI between metropoIitan
regions and medium country
municipaIities
DifferentiaI between medium and
smaII country municipaIities
DifferentiaI between metropoIitan
regions and smaII country
municipaIities
S ConLrlbuLlon of chunges ln Lhe dlsLrlbuLlon of
lncome from usseLs (renLs, lnLeresL und
dlvldends) und rlvuLe Lrunsfers wus
unequullzlng buL llmlLed.
S MosL of Lhe lmucL of non-lubor lncome on Lhe
reducLlon of overull lncome lnequullLy wus due
Lo chunges ln Lhe dlsLrlbuLlon of ubllc Lrunsfers:
chunges ln slze, coveruge und dlsLrlbuLlon of
ubllc Lrunsfers. 8olsu lumlllu uccounLs for close
Lo ercenL of Lhe decllne ln household er
culLu lncome lnequullLy.
The discussion of remittances is important for Asia too. Many gvts here trust in remittances a lot (e.g. PH). But
you say that in LA remittances have little redistributive effect. think the same is here in Asia, as remittances are
S 1he shur rlse ln Lhe role und equullzlng lmucL
of ubllc Lrunsfers wus u consequence of u
slgnlflcunL ollcy shlfL ln #, when Lhe
governmenL luunched Lhe condlLlonul cush
Lrunsfer rogrum ^[Y^W_S\[^`aZVSVW_.
S Lurlng #-z# Lhe slze of ubllc Lrunsfers
lncreused, Lhey becume more equully dlsLrlbuLed
umong recllenLs, und Lhe recllenLs of Lrunsfers
lncreuslngly belonged Lo reluLlvely oorer
segmenLs of Lhe ouluLlon.
#
S Lubor lncome lnequullLy:
Chunges ln educuLlonul sLrucLure were equullzlng uL
Lhe household und lndlvlduul workers levels.
Chunges ln reLurns Lo educuLlon, however, were
equullzlng uL Lhe lndlvlduul workers level buL noL uL
Lhe household level. Chunges ln ussorLuLlve muLchlng
mlghL huve been u fucLor.
Lurnlngs gu by sklll nurrowed uL Lhe lndlvlduul
workers level us ln Lhe oLher counLrles. ludlng ouL of
sklll-blused Lechnlcul chunge und u more equul
dlsLrlbuLlon of educuLlonjeducuLlonul ugrudlng.
exL Lwo slldes show Lhe Clnl for yeurs of schoollng
und Lhe reLurns Lo schoollng.
#