Inequality bands: seventy-five years of measuring income inequality in Latin America

Alvaredo, Facundo ORCID: 0009-0002-1530-9150, Bourguignon, François, Ferreira, Francisco H. G. ORCID: 0000-0001-8926-0500 and Lustig, Nora (2024) Inequality bands: seventy-five years of measuring income inequality in Latin America. Oxford Open Economics. ISSN 2752-5074 (In Press)

Text (Inequality Bands Seventy-five years of measuring income inequality in Latin America) - Accepted Version Pending embargo until 1 January 2100. Download (1MB)

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Abstract

Drawing on a comprehensive compilation of quantile shares and inequality measures for 34 countries, including over 5,600 estimated Gini coefficients, we review the measurement of income inequality in Latin America and the Caribbean over the last seven decades. We find that there is quite a bit of uncertainty regarding inequality levels for the same country/year combinations. Differences in inequality levels estimated from household surveys alone are present but they derive from differences in the construction of the welfare indicator, the unit of analysis, or the treatment of the data. With harmonized household surveys, the discrepancies are quite small. The range, however, expands significantly when –to correct for undercoverage and underreporting especially at the top of the distribution– inequality estimates come from some combination of surveys and administrative tax data. The range increases even further when survey-based income aggregates are scaled to achieve consistency not only with tax registries but with National Accounts. Since no single method to correct for underreporting at the top is fully convincing at present, we are left with (often wide) ranges, or bands, of inequality as our best summaries of inequality levels. Reassuringly, however, the dynamic patterns are generally robust across the bands. Although the evidence roughly until the 1970s is too fragmentary and difficult to compare, clearer patterns emerge for the last fifty years. The main feature is a broad inverted U curve, with inequality rising in most countries prior to and often during the 1990s, and falling during the early 21st century, at least until around 2015, when trends appear to diverge across countries. This pattern is broadly robust but features considerable variation in timing and magnitude depending on the country.

Item Type:	Article
Additional Information:	© 2024
Divisions:	International Inequalities Institute
Subjects:	H Social Sciences
JEL classification:	D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement O - Economic Development, Technological Change, and Growth > O5 - Economywide Country Studies > O54 - Latin America; Caribbean
Date Deposited:	13 Aug 2024 10:36
Last Modified:	19 Dec 2024 16:33
URI:	http://eprints.lse.ac.uk/id/eprint/124532

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