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Falling Inequality in Latin America: The Role of Fiscal Policy
Published online by Cambridge University Press: 09 June 2020
Abstract
Latin America is one of the world's only regions to have witnessed a fall in income inequality during the 2000s. This paper evaluates the role fiscal policy played in this change. Recent scholarship has examined this in individual countries; lacking is a regional perspective. We examine the effects of nine fiscal instruments on income inequality in 17 countries between 1990 and 2014. Fiscal policy had a positive – albeit small – effect in reducing income inequality, especially from 2003, working best at the urban level. Public spending on education, personal income taxes and social contributions were especially instrumental in reducing income inequality.
Spanish abstract
América Latina es una de las únicas regiones del mundo que observó una disminución en la desigualdad del ingreso durante la década de 2000. En este artículo se evalúa el papel que desempeñó la política fiscal en este cambio distributivo. Estudios recientes han examinado este cambio en países individuales; lo que falta es una perspectiva regional. En este trabajo examinamos los efectos de nueve instrumentos fiscales sobre la desigualdad del ingreso en 17 países entre 1990 y 2014. La política fiscal tuvo un efecto positivo, aunque exiguo, en la reducción de la desigualdad del ingreso, especialmente a partir de 2003, funcionando mejor a nivel urbano. El gasto público en educación, los impuestos a la renta personal y las contribuciones a la seguridad social fueron especialmente importantes para reducir la desigualdad del ingreso.
Portuguese abstract
A América Latina é uma das únicas regiões do mundo a testemunhar uma queda na desigualdade de renda durante os anos 2000. Este artigo avalia o papel da política fiscal nessa mudança. Estudos recentes examinaram isso em países de forma individual; o que falta é uma perspectiva regional. Examinamos os efeitos de nove instrumentos fiscais sobre a desigualdade de renda em 17 países entre 1990 e 2014. A política fiscal teve um efeito positivo – embora pequeno – na redução da desigualdade de renda, especialmente a partir de 2003, funcionando melhor no nível urbano. Os gastos públicos em educação, imposto de renda, taxas e contribuições sociais foram especialmente úteis para reduzir a desigualdade de renda.
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References
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24 Data for Latin America are unweighted regional averages based on national data provided by ECLAC on its CEPALSTAT website, https://estadisticas.cepal.org/cepalstat/WEB_CEPALSTAT/estadisticasIndicadores.asp?idioma=i (last accessed 15 Jan. 2020).
25 Ibid.
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