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Firms and inequality in Latin America

Eslava, Marcela, Meléndez, Marcela, Ulyssea, Gabriel, Urdaneta, Nicolás and Flores, Ignacio (2024) Firms and inequality in Latin America. III Working Papers (138). International Inequalities Institute, London School of Economics and Political Science, London, UK.

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The relationship between firms and inequality has been a focus of recent attention globally. This chapter summarizes basic facts about this relationship for Latin America. Unlike advanced economies where superstar firm growth has prompted concerns over disproportionate income growth at the top, the facts we summarize illustrate that the main concern for Latin America is the extreme prevalence of tiny businesses whose workers and owners tend to populate the bottom income segments. The empirical likelihood that these businesses improve their productivity and grow to hire more workers and pay better wages is also very low. The region displays a deficit of employment generation in SMEs, by contrast to both microbusinesses (including self-employment) and large corporations. While the former tend to remunerate both workers and owners with very low incomes, the latter pay high wages but also exhibit low labor shares.

Item Type: Monograph (Working Paper)
Official URL:
Additional Information: © 2024 The Authors
Divisions: International Inequalities Institute
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HF Commerce
H Social Sciences > HD Industries. Land use. Labor
JEL classification: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E20 - General
J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J21 - Labor Force and Employment, Size, and Structure
O - Economic Development, Technological Change, and Growth > O5 - Economywide Country Studies > O54 - Latin America; Caribbean
Date Deposited: 23 Apr 2024 13:03
Last Modified: 16 May 2024 12:35

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