Seventy-five years of measuring income inequality in Latin America

Long considered one of the most unequal regions in the world, Latin America also has a rich history of producing statistics on inequality and poverty. Despite this tradition, measuring inequality remains a work in progress.

Drawing on a comprehensive compilation of quantile shares and inequality measures for 34 countries, including over 5,600 estimated Gini coefficients, Facundo Alvaredo, François Bourguignon, Francisco Ferreira, and Nora Lustig review the measurement of income inequality in Latin America and the Caribbean over the past seven decades.

Key findings:

• Although the evidence until the 1970s is too fragmentary and difficult to compare, clearer patterns emerge for the last fifty years. The central feature of these patterns is a broad inverted U curve, with inequality rising in most countries prior to the 1990s, and falling during the early 21st century, at least until the mid-2010s, when trends appear to diverge. This broad pattern is modified by country specificities, with some variation in timing and magnitude.
• While this broad picture emerges for the dynamics, there is much more uncertainty about the levels of inequality in the region. The uncertainty arises from the disparity in estimates for the same country/year combinations, depending on whether they come from household surveys exclusively, from a combination of surveys and administrative tax data, and whether they attempt to scale income aggregates to national accounts estimates.
• So far as the inequality levels are concerned, we live in a world of some uncertainty, which the paper approaches by means of a set of inequality bands. Reassuringly, however, the dynamic patterns are generally robust across the bands.

AUTHORS

• Facundo Alvaredo, Paris School of Economics-World Inequality Lab; IIEP-UBA; CEPR.
• François Bourguignon, Paris School of Economics; University of New York in Abu Dhabi.
• Francisco Ferreira, International Inequalities Institute, London School of Economics; IZA.
• Nora Lustig, Tulane University.

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