Inequality advances may be reversed in Latin America

Significance

In the last two years, the pandemic together with deteriorating macroeconomic conditions have likely contributed to income concentration. At the same time, new research based on tax data has confirmed the high income share of the wealthy in most Latin American countries.

Impacts

• Low economic growth will contribute to high levels of informality across the region.
• Informality will continue to reduce opportunities to improve the distribution of incomes before taxes and expenditure.
• The discourse of austerity will remain dominant across the region and reduce the opportunities to adopt ambitious social programmes.
• Growing research on income distribution will provide further information on the continuing economic power of elites.