The rise and fall of income inequality in Chile

This paper presents evidence on a rise and fall in income inequality in Chile during the past two decades. We show that income inequality rises from 1990 to 2000 and then falls from 2000 to 2011. We perform simple but informative decompositions to figure out the contributing factors behind that diss...

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Bibliographic Details
Published inLatin American economic review Vol. 26; no. 1; pp. 1 - 31
Main Authors Parro, Francisco, Reyes, Loreto
Format Journal Article
LanguageEnglish
Published Heidelberg Springer 2017
Springer Berlin Heidelberg
Economica
Centro de Investigación y Docencia Económicas
Subjects
Development Economics
Economic growth
Economic models
Economic Policy
Economics
Economics and Finance
Educational Policy and Politics
Environmental Economics
Falls
Higher education
Human capital
Income inequality
Inequality
Labor Economics
Labor markets
Regional/Spatial Science
Skills
Chile
Labor markets
J21
J31
Skills
J24
Inequality
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Summary:This paper presents evidence on a rise and fall in income inequality in Chile during the past two decades. We show that income inequality rises from 1990 to 2000 and then falls from 2000 to 2011. We perform simple but informative decompositions to figure out the contributing factors behind that dissimilarity in the behavior of inequality across those two subperiods. Our results are consistent with a story in which economic growth increases the demand for more educated workers, initially increasing inequality. However, those higher returns to education encourage agents to invest in higher education, producing a subsequent human capital deepening that reduces inequality at later stages of the development process.
ISSN:2196-436X
2198-3526
2196-436X
DOI:10.1007/s40503-017-0040-y