Using some microeconometric decompositions, the authors find that the expansion in education in Latin America was unequalizing
, confirming the "paradox of progress" of Bourguignon, Ferreira and Lustig (2005).
In terms of domestic macroeconomic measures most countries avoided the traditional pro-cyclical unequalizing
fiscal and monetary biases of the past.
We find that the direct effect of the increase in education experienced by most countries in Latin America in the last two decades was unequalizing, a result that is closely linked to the convexity of returns to education.
For instance, as the population becomes more educated, the change in the relative supply of skilled workers modifies returns to education, which can in turn compensate for the first-order unequalizing impact.
The first simulation reveals that the education expansion had a direct, first-round unequalizing impact on the earnings distribution of approximately 1 Gini point.
Under Simulation 1 the education expansion had an unequalizing impact on earnings in 11 countries, while it was equalizing only in Uruguay.
The outcomes from Simulation 1 indicate that during the 1990s changes in education in Latin American countries had, on average, a direct unequalizing impact on the earnings distribution of 0.
Therefore, international remittances have an unequalizing
effect on rural incomes; a 10% increase in remittances from migrants abroad increases the Gini coefficient by 0.
16) Certain types of sudden economic changes such as the incorporation of a new technology, may initially have a strong unequalizing
impact when unskilled labor is displaced.
6) Even though there was significant educational upgrading and the distribution of the education stock became more equal, these changes were unequalizing
because of the so-called "paradox of progress" (see Bourguignon et al.
Taxation remains unequalizing in about one-third of Latin American countries, especially in Central America
Overall, however, taxation was unequalizing in approximately one-third of Latin American countries, especially in Central America.