Growth, inequality, and poverty in Latin America: historical evidence, controlled conjectures.

Abstract

How have growth and inequality affected poverty reduction in Latin America over the long run? On the basis of the available evidence on growth and inequality tentative answers and conjectures are proposed about the long run evolution of poverty in Latin America. Modern Latin America experienced sustained growth since mid nineteenth century only brought to a halt during the 1980s. Inequality, in turn, rose steadily until a high plateau in which it has stabilized over the last four decades of the twentieth century. A calibration exercise on the basis of López and Servén (2005) recent empirical research suggests that absolute poverty has experienced a long-run decline in Latin America since the late nineteenth century, interrupted in the 1890s and the 1930s, and only reversed in the 1980s. Growth emerges as the main element underlying the reduction in absolute poverty, and almost exclusively in the second half of the twentieth century.