The Pink Tide and Inequality in Latin America

Latin American countries experienced a significant reduction in income inequality at the turn of the 21st century. From the early 2000s to around 2012, the average Gini coefficient fell from 0.514 to 0.476. The period of falling inequality coincided with leftist presidential candidates achieving electoral victories across the region: by 2009, ten of the seventeen countries had a leftist president – the so-called Pink Tide. We investigate whether there was a “leftist premium” on the decline in inequality and, if there was one, through which mechanisms. Using a range of econometric models, inequality measurements, and samples, we find evidence that leftist governments lowered income inequality faster than non-leftist regimes, increasing the income share captured by the first seven deciles at the expense of the top ten percent. Our analysis suggests that this reduction was achieved by increasing social pensions, minimum wages, and tax revenue.