Abstract

Giovanni Andrea Cornia challenges the idea that a recession by definition increases inequality. In the first decade of the twenty-first century various Latin American countries saw declines in income inequality. These declines in inequality were the result of changes in the political regimes towards the left or the centre, from deliberate policies changes as well as from changes in international conditions. Policies that helped to reduce inequality included a rise in secondary education of low-middle class children, labour market policies that included a rise in the minimum wages greater than in average wages, improved collective bargaining, especially in Southern Cone countries and a formalization of informal jobs, changes in tax policies, that included a rising tax/GDP ratio, more progressive taxation, more attention in public expenditure towards the poor, including social transfers in the form of social pensions and Conditional Cash transfers.