Essays on the Political Economy of Growth and Inequality in Latin America

This dissertation investigates issues of growth and inequality from a political economy perspective in three different ways. The first part studies the views on income distribution followed by the structuralists of the 1940s and 1950s and makes two points; First, it traces their contribution to the study of income distribution and compares the views of the Anglo-Saxon and the Latin American structuralists. Second, it highlights how these contributions offer a set of ideas that can be used to study current issues of inequality. The second part combines economic history and political economy analysis to reveal the nature of income inequality during the State Led Industrialization (SLI) and the neoliberal periods in a sample of Latin American countries. Our finding reveals that the SLI period is characterized by a set of redistributive patterns of growth, in the neoliberal era these patterns were partially reversed until 1995-96 when redistributive patterns remerged. For a sample of 18 countries in the 1988-2008 period, increases in the capital to labor ratio are associated with decreases in personal income inequality for deciles 3, 4 and 5. Our study of the economic history shows that monotonic decreases (increases) in personal income inequality are closely related with the endurance of progressive (regressive) political and economic coalitions. The third part uses Input-Output analysis to study the empirical relationship between trade globalization and inequality in Chile and Mexico. Our results provide evidence that the structure of the trade sector as well as the strength of inter-industry linkages matters for wage inequality among industries. The computation of employment creation due to changes in trade patterns shows that between 2003 and 2008 job losses were higher than the jobs created for the case of Mexico. The opposite outcome was the case for Chile between 1996 and 2008. Our computation of the regional Theil index shows that for Chile and Mexico inequality among regions remained constant in the period under analysis.