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on Central and South America |
| By: | Richard Blundell (University College, London); Mariano Bosch (Inter-American Development Bank); Nora Lustig (Tulane University); Marcela Melendez (World Bank) |
| Abstract: | This paper analyzes how the state can take actions to reduce the persistent and multifaceted nature of inequality in Latin America, where inherited factors account for 50-60% of disparities in individual earnings. Despite declines in income, education, and gender inequality, the region maintains the world's highest income inequality levels, with Gini coe icients above 0.45. Latin America continues to be characterized by significant ethnic and racial disparities, gender wage gaps, and fragmented market structures dominated by giant firms with excessive pricing and wage-setting power. The paper argues for comprehensive state intervention through a three-pronged approach : (1) closing earnings potential gaps through improved education, health, and skill development policies; (2) shaping labor and output markets through productivity-enhancing measures, minimum wage regulations, and competition policies; and (3) redistributing income via fiscal instruments including taxes, transfers, and social security systems. The paper emphasizes that effective inequality reduction requires a holistic policy mix integrating both pre-fiscal interventions addressing structural causes and post fiscal redistribution mechanisms, as purely redistributive approaches cannot adequately address deeper market ine iciencies and intergenerational transmission of disadvantage. |
| Keywords: | income inequality, intergenerational transmission, ethnic and gender disparities, state intervention, fiscal redistribution, education |
| JEL: | D31 D63 I24 I38 O54 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:tul:wpaper:2505 |
| By: | Duhalde Juan Cruz; Gomez Gonzalez Carlos; Clochard Gwen-Jiro; Dietl Helmut |
| Abstract: | This paper considers two types of statistical discrimination: individual (productivity) and collecetive (team fit). We conduct a large-scale correspondence study in 15 Latin American countries in the context of sports to test their influence on individual behavior. We send over 10, 000 applications to male amateur soccer clubs and ask them to participate in a practice session. Each club receives one application, randomly varying the applicant’s origin and signals about individual and collective productivity. We find no evidence of discrimination against immigrants overall, but we observe heterogeneity that is consistent with individual statistical discrimination. Productivity signals have no significant influence. |
| JEL: | C92 J15 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:aep:anales:4796 |
| By: | Cortazar, Rene |
| Keywords: | International Development, Labor and Human Capital |
| URL: | https://d.repec.org/n?u=RePEc:ags:weprwp:259246 |
| By: | Fergusson Leopoldo (Universidad de los Andes); Natalia Garbiras-Díaz (Harvard University); Michael Weintraub (Universidad de los Andes) |
| Abstract: | Do accents—the way that language is pronounced—shape social and economic interactions? We answer this question using an experiment embedded in an online survey of 6, 000 Colombian adults. Respondents evaluated paired profiles in which audio introductions were randomly assigned to feature either a high- or low-class accent, while income, education, and other attributes were independently randomized. We find a sizable accent premium: speakers with high-class accents are 5–16 percentage points more likely to be chosen as friends, business partners, colleagues, or bosses. This premium is significantly larger among respondents with high socioeconomic status, consistent with an in-group favoritism capable of reproducing inequality. By varying the information we present to respondents, our experiment allows us to conclude that the premium cannot be attributed solely to inferences about income or education. We further show that the premium vanishes for high-class foreign accents, suggesting that class cues are culturally specific and difficult for outsiders to detect. Finally, we document that respondents systematically associate high-class accents with multiple proxies of social status and that they elicit more deferential treatment. Overall, our findings reveal that accents function as a form of capital: culturally specific linguistic signals that reproduce social hierarchies, with implications for labor markets and efforts to promote mobility and integration. |
| Keywords: | Accents; Class-based Discrimination; Social Capital; Cultural Capital; Inequality. |
| JEL: | C90 D63 J15 Z13 O15 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:col:000089:022044 |
| By: | Juan Camilo Obando Martínez (Universidad de los Andes) |
| Abstract: | Accurate measurement of income inequality remains a critical challenge in developing economies, particularly due to the underreporting of top incomes in traditional household surveys. In Colombia, while previous research has improved income measurement through tax records, these approaches fail to capture undistributed corporate profits that constitute a significant portion of top earners’ economic resources. This study addresses this limitation by employing Colombia’s Beneficial Ownership Registry (BOR), a novel administrative dataset linking corporate entities to their ultimate individual beneficiaries. I assess the BOR’s strengths in revealing ownership transparency and its limitations. Building on this foundation, I develop a economic income measure that allocates undistributed corporate profits to individuals, revealing that incomes of the top 0.01% nearly double when these profits are included. Extending this framework to effective tax rates (ETRs) shows that ETRs increase throughout the personal income distribution, while the overall shape of the ETR profile remains unchanged. In particular, effective tax rates continue to decline at the very top of the distribution. Thus, corporate taxes act as a partial backstop by raising effective tax rates throughout the distribution, even though the regressive pattern at the very top persists. Finally, comparisons with France and Brazil highlight similar regressive patterns and the potential of administrative datasets like the BOR to enhance fiscal transparency and equitable tax policy. |
| Keywords: | Top incomes, tax progressivity, corporate profits, beneficial ownership, inequality measurement |
| JEL: | D31 H24 H26 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:col:000089:022127 |