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Economic development and fluctuations in earnings inequality in the very long run: The evidence from Latin America 1900-2000

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  • Valpy FitzGerald

    (Oxford University, Oxford, UK)

Abstract

Latin America has the most unequal income distribution of any region in the world, yet its historical causes are poorly understood. This paper reports the first exploratory attempt to compute income distributions for the five leading Latin American economies for the whole 20th century. The methodology produces estimates of earnings dispersion for four skill groups over 1900-2000, which can be used to generate the familiar Gini coefficients. Large fluctuations in dispersion over time are found: countering claims of stability since the colonial past in the recent economic institutions literature; but supporting the findings of economic historians and development economists. An estimation model (reflecting the impact of international trade, labour quality and macroeconomic imbalances) explains the data reasonably well, with all three sets of drivers proving significant, although the measured effects are different across the five countries. The paper concludes that the skill composition of the workforce not only underpins long run trends in income distribution; but also conditions inequality fluctuations in response to exogenous shocks. Copyright © 2008 John Wiley & Sons, Ltd.

Suggested Citation

  • Valpy FitzGerald, 2008. "Economic development and fluctuations in earnings inequality in the very long run: The evidence from Latin America 1900-2000," Journal of International Development, John Wiley & Sons, Ltd., vol. 20(8), pages 1028-1048.
    • Handle: RePEc:wly:jintdv:v:20:y:2008:i:8:p:1028-1048
    DOI: 10.1002/jid.1511
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    Cited by:

    1. Javier Rodríguez Weber, 2018. "Alta desigualdad en América Latina: desde cuándo y por qué," Documentos de trabajo 51, Programa de Historia Económica, FCS, Udelar.
    2. Leticia Arroyo Abad & Pablo Astorga Junquera, 2017. "Latin American earnings inequality in the long run," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 11(3), pages 349-374, September.
    3. Pablo Astorga, 2015. "Functional Inequality in Latin America: News from the Twentieth Century," Oxford Economic and Social History Working Papers _135, University of Oxford, Department of Economics.
    4. Gazeley, Ian & Holmes, Rose & Lanata Briones, Cecilia & Newell, Andrew T. & Reynolds, Kevin & Rufrancos, Hector Gutierrez, 2018. "Latin American Household Budget Surveys 1913-1970 and What They Tell Us about Economic Inequality among Households," IZA Discussion Papers 11430, Institute of Labor Economics (IZA).
    5. Pablo Astorga, 2024. "Revealing The Diversity And Complexity Behind Long-Term Income Inequality In Latin America, 1920-2011," Working Papers 0250, European Historical Economics Society (EHES).
    6. Pablo Astorga, 2015. "Functional Inequality in Latin America: News from the Twentieth Century," Oxford University Economic and Social History Series _135, Economics Group, Nuffield College, University of Oxford.
    7. von Fintel, Dieter & Links, Calumet & Green, Erik, 2023. "Estimating Historical Inequality from Social Tables: Towards Methodological Consistency," Lund Papers in Economic History 247, Lund University, Department of Economic History.
    8. Rodríguez Weber, Javier, 2015. "Estimación de desigualdad de ingreso y otras variables relacionadas para Chile entre 1860 y 1970. Metodología y resultados obtenidos [Income inequality estimates for Chile between 1860 and 1970. Me," MPRA Paper 68400, University Library of Munich, Germany.
    9. Stefania Galli & Dimitrios Theodoridis & Klas Rönnbäck, 2023. "Economic inequality in Latin America and Africa, 1650 to 1950: Can a comparison of historical trajectories help to understand underdevelopment?," Economic History of Developing Regions, Taylor & Francis Journals, vol. 38(1), pages 41-64, January.
    10. Paul Segal, 2022. "On the Character and Causes of Inequality in Latin America," Development and Change, International Institute of Social Studies, vol. 53(5), pages 1087-1102, September.
    11. Pedro Fandiño, 2022. "The role of social conventions on wage inequality: the Brazilian trajectory and the missed “Great Leveling”," Review of Evolutionary Political Economy, Springer, vol. 3(2), pages 435-455, July.

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