Inequality, Poverty and Leftist Governments in LA

Nora Lustig

Social Policy in LA since the Left TurnTulane University

April 1, 2014

Inequality in Last Decade 2000-2011 (Yearly changes in Gini; SEDLAC, Feb 2014 for LA)

LA Poverty Changes: Redistribution vs Growth (Lustig et al, 2014)

4

Determinants of Change in InequalityWage Gap (red); Transfers (Green); Demographic (Blue) (Azevedo et al. 2012)

www.commitmentoequity.org

6

Fiscal Policy and Political Regime Gini: Left (Green) Nonleft (Black) –CEQ Project

Market Income

Net Market Income

Disposable Income

Post-Fiscal Income

Final Income0.39

0.41

0.43

0.45

0.47

0.49

0.51

0.53

0.55

0.57

0.59

Brazil

Chile

Argentina

Uruguay

Bolivia

Colombia

Guatemala

Paraguay

Peru

Mexico

Costa Rica

7

Headcount: Before and After Cash Transfers

8

However, net Payers to the Fisc: Left Not More Pro-poor

9

And, consumption taxes offset the poverty-reducing effect of cash transfers in Brazil (and

Bolivia)

Market Income Net Market Income

Disposable Income

Post-Fiscal Income

20.0%

22.0%

24.0%

26.0%

28.0%

30.0%

32.0%

Brazil (2009)

Mexico (2010)

Peru (2009)

10

And, Poor Pardos in Brazil Receive Less in Cash Transfers than Equally Poor Whites

Incidence of Cash Tranfers by Race

11

Budget Size and CompositionPrimary and Social Spending as % of GDP

(Lustig, Pessino and Scott, 2014)

12

13

Argentina: Evolution of Pensions(Lustig and Pessino, 2014; this and next two slides)

20032004

20052006

20072008

2009

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

0.3 0.4 0.4 0.5 0.6 0.7 0.8

0 0 0 0.2

1.41.8

2.2

3.6 3.7 3.7 4.0

5.35.8

6.3

NCP (excluding Moratorium)MoratoriumContributoryALL