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Income Polarization in Latin America: Patterns and Links with Institutions and Conflict

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  • Leonardo Gasparini
  • Matias Horenstein
  • Ezequiel Molina
  • Sergio Olivieri

Abstract

This paper presents a set of statistics that characterize the degree of income polarization in Latin America and the Caribbean (LAC). The study is based on a dataset of household surveys from 21 LAC countries in the period 1989-2004. Latin America is characterized by a high level of income polarization. On average, income polarization mildly increased in the region in the period under analysis. The paper suggests that institutions and conflict interact in different ways with the various characteristics of the income distribution. In particular, countries with high income polarization and inequality are more likely to have high levels of social conflict.

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  • Leonardo Gasparini & Matias Horenstein & Ezequiel Molina & Sergio Olivieri, 2008. "Income Polarization in Latin America: Patterns and Links with Institutions and Conflict," Oxford Development Studies, Taylor & Francis Journals, vol. 36(4), pages 461-484.
    • Handle: RePEc:taf:oxdevs:v:36:y:2008:i:4:p:461-484
    DOI: 10.1080/13600810802457365
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    1. Alberto Chong & Mark Gradstein, 2007. "Inequality and Institutions," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 454-465, August.
    2. Matteo Cervellati & Piergiuseppe Fortunato & Uwe Sunde, 2008. "Hobbes to Rousseau: Inequality, Institutions and Development," Economic Journal, Royal Economic Society, vol. 118(531), pages 1354-1384, August.
    3. Stanley L. Engerman & Kenneth Lee Sokoloff, 2002. "Factor Endowments, Inequality, and Paths of Development Among New World Economies," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2002), pages 41-110, August.
    4. Alberto Chong & Mark Gradstein, 2007. "Inequality and Institutions," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 454-465, August.
    5. Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2005. "Governance matters IV : governance indicators for 1996-2004," Policy Research Working Paper Series 3630, The World Bank.
    6. Leonardo Gasparini & Matías Horenstein & Sergio Olivieri, 2006. "Economic Polarisation in Latin America and the Caribbean: What do Household Surveys Tell Us?," CEDLAS, Working Papers 0038, CEDLAS, Universidad Nacional de La Plata.
    7. Stanley L. Engerman & Kenneth L. Sokoloff, 2005. "Colonialism, Inequality, and Long-Run Paths of Development," NBER Working Papers 11057, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Scott Rozelle & Yiran Xia & Dimitris Friesen & Bronson Vanderjack & Nourya Cohen, 2020. "Moving Beyond Lewis: Employment and Wage Trends in China’s High- and Low-Skilled Industries and the Emergence of an Era of Polarization," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 62(4), pages 555-589, December.
    2. Fernando Borraz & Nicolás Gonzalez Pampillón & Máximo Rossi, 2011. "Polarization and the Middle Class," Documentos de Trabajo (working papers) 2011, Department of Economics - dECON.
    3. Javier Alejo & Gabriel Montes-Rojas & Walter Sosa-Escudero, 2023. "RIF regression via sensitivity curves," Statistical Methods & Applications, Springer;Società Italiana di Statistica, vol. 32(1), pages 329-345, March.
    4. Esteban Cabrera Cevallos & Edwin Buenaño, 2018. "¿Ha crecido la clase media en el Ecuador? Un análisis mediante índices de polarización del ingreso para el periodo 2007-2014," Revista de Economía del Rosario, Universidad del Rosario, vol. 21(1), pages 121-152, June.
    5. Zhang, Chen & Yu, Yangcheng & Li, Qinghai, 2023. "Top incomes and income polarisation in China," China Economic Review, Elsevier, vol. 77(C).
    6. Nelson R. Ramírez- Rondán & Marco E. Terrones & Diego Winkelried, 2020. "Equalizing growth: The case of Peru," Working Papers 176, Peruvian Economic Association.
    7. Gomez-Mejia, Luis R. & Mendoza-Lopez, Anabel & Cruz, Cristina & Duran, Patricio & Aguinis, Herman, 2024. "Socioemotional wealth in volatile, uncertain, complex, and ambiguous contexts: The case of family firms in Latin America and the Caribbean," Journal of Family Business Strategy, Elsevier, vol. 15(1).
    8. Li, Jing & Wan, Guanghua & Wang, Chen & Zhang, Xueliang, 2019. "Which indicator of income distribution explains crime better? Evidence from China," China Economic Review, Elsevier, vol. 54(C), pages 51-72.
    9. Wang, Jinxian & Caminada, Koen & Goudswaard, Kees & Wang, Chen, 2015. "Decomposing income polarization and tax-benefit changes across 31 European countries and Europe wide, 2004-2012," MPRA Paper 66155, University Library of Munich, Germany.
    10. Leonardo Gasparini & Germ'an Reyes, 2022. "Are Fairness Perceptions Shaped by Income Inequality? Evidence from Latin America," Papers 2202.04591, arXiv.org, revised Oct 2022.
    11. Leonardo Gasparini & Guillermo Cruces & Leopoldo Tornarolli & Mariana Marchionni, 2009. "A Turning Point? Recent Developments on Inequality in Latin America and the Caribbean," CEDLAS, Working Papers 0081, CEDLAS, Universidad Nacional de La Plata.
    12. Kritika Sen, 2018. "Poverty, Economic Inequality and Polarization: A District-Wise Analysis of Maharashtra," Indian Journal of Human Development, , vol. 12(3), pages 420-440, December.
    13. Fernando Borraz & Nicolás González & Máximo Rossi, 2013. "Polarization and the Middle Class in Uruguay," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 50(2), pages 289-326, November.
    14. Morrow, John & Carter, Michael, 2013. "Left, right, left: income, learning and political dynamics," MPRA Paper 45020, University Library of Munich, Germany.
    15. Azis Iwan J. & Pratama Alvin, 2020. "Polarization and Local Conflicts in Post Decentralization Indonesia," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 26(2), pages 1-28, May.
    16. Wang, Chen & Wan, Guanghua, 2015. "Income polarization in China: Trends and changes," China Economic Review, Elsevier, vol. 36(C), pages 58-72.
    17. Michael Carter & John Morrow, 2012. "Left, Right, Left: Income and Political Dynamics in Transition Economies," CEP Discussion Papers dp1111, Centre for Economic Performance, LSE.
    18. Ernesto Cárdenas, 2013. "Social polarization and conflict: A network approach," Revista Cuadernos de Economia, Universidad Nacional de Colombia, FCE, CID, December.
    19. Germán Reyes & Leonardo Gasparini, 2022. "Are fairness perceptions shaped by income inequality? evidence from Latin America," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(4), pages 893-913, December.

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