Inequality, Poverty and
Leftist Governments in LA
Nora Lustig
Social Policy in LA since the Left Turn
Tulane University
April 1, 2014
Inequality in Last Decade 2000-2011
(Yearly changes in Gini; SEDLAC, Feb 2014 for LA)
3.00
2.61
2.00
1.02
1.00
0.74 0.69 0.64
0.61
0.09
0.00
-1.00
-1.00 -0.92
-0.79 -0.74 -0.72 -0.70
-0.58
-0.42 -0.40
-0.28
-0.89
-1.28
-1.68 -1.62
-2.00
USA
Russia
China
South Africa
Indonesia
LAC-17
Honduras
Costa Rica*
Venezuela
Paraguay
Guatemala
Uruguay
Mexico
Chile
Panama
Dom. Rep.
Perú
Brazil
Argentina
El Salvador
Ecuador
Nicaragua
-3.00 -2.64
Bolivia
-2.08
LA Poverty Changes: Redistribution vs
Growth (Lustig et al, 2014)
Redistribution
Growth
Change in poverty (US$4 per day) during the 2000s
100%
80%
60%
40%
20%
0%
-23.0
Paraguay
Mexico
Honduras
Guatemala
-22.1
El Salvador
Ecuador
Dom. Rep.
-21.9
-10.9
-11.6
-30.3
Venezuela
-8.9
Uruguay
-8.0
Peru
-7.8
-8.4
Panama
-9.0
Costa Rica
Argentina
-60%
Brazil
-24.9
-40%
-18.4
-11.4
Chile
-10.6
Bolivia
-20%
6.8
Determinants of Change in Inequality
Wage Gap (red); Transfers (Green);
Demographic (Blue) (Azevedo et al. 2012)
100%
80%
60%
40%
20%
4
LA
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-20%
Br
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0%
-40%
-60%
-80%
4
www.commitmentoequity.org
Fiscal Policy and Political Regime
Gini: Left (Green) Nonleft (Black) –CEQ Project
0.59
0.57
Brazil
0.55
Chile
0.53
Argentina
0.51
Uruguay
Bolivia
0.49
Colombia
0.47
Guatemala
0.45
Paraguay
Peru
0.43
Mexico
0.41
Costa Rica
0.39
Market Income
Net Market
Income
Disposable
Income
Post-Fiscal
Income
Final Income
6
Headcount: Before and After Cash
Transfers
25.00%
20.00%
Argen na
15.00%
Bolivia
Brazil
Mexico
10.00%
Peru
Uruguay
5.00%
0.00%
Net Market Income
Disposable Income
7
However, net Payers to the Fisc: Left
Not More Pro-poor
Incidence of Post-Fiscal Income by Decile
20.0%
15.0%
Net Change in Income
10.0%
5.0%
Bolivia (2009)
Brazil (2009)
0.0%
1
2
3
4
5
6
7
8
9
10
Mexico (2010)
Peru (2009)
-5.0%
Uruguay (2009)
-10.0%
-15.0%
-20.0%
Decile
8
And, consumption taxes offset the povertyreducing effect of cash transfers in Brazil (and
Bolivia)
32.0%
30.0%
28.0%
26.0%
Brazil (2009)
24.0%
Mexico (2010)
22.0%
Peru (2009)
20.0%
Market Income Net Market Income Disposable Income Post-Fiscal Income
9
And, Poor Pardos in Brazil Receive Less in
Cash Transfers than Equally Poor Whites
Incidence of Cash Tranfers by Race
200.0%
180.0%
160.0%
140.0%
120.0%
100.0%
Whites
80.0%
Pardos
60.0%
40.0%
20.0%
0.0%
0 - 1.25
1.252.50
2.50 - 4
4 - 10
10 - 50
50+
10
Budget Size and Composition
Primary and Social Spending as % of GDP
(Lustig, Pessino and Scott, 2014)
11
Argen na-Reduc on in Inequality: Market (blue) vs.
Redistribu on (red)
43%
Redistribu on
124%
58%
Market
-24%
2003-06
2006-09
12
Argen na-Reduc on in Poverty: Market (blue) vs.
Redistribu on (red)
88%
Redistribu on
110%
Market
12%
-10%
2003-06
2006-09
13
Argentina: Evolution of Pensions
(Lustig and Pessino, 2014; this and next two slides)
6.3
7.0
5.8
5.3
6.0
3.6
5.0
3.7
3.7
4.0
NCP (excluding Moratorium)
4.0
Moratorium
3.0
Contributory
2.0
1.0
0.3
0
0.4
0
0.4
0.0
2003
2004
2005
0
0.5
2006
2.2
1.8
1.4
0.2
0.6
2007
0.7
2008
0.8
2009
ALL