The Anatomy of Inequality in Latin America and the Caribbean: History, Measurement and Mitigation

Abstract

Despite making some progress since the turn of the 21st century, as of 2024, Latin America and the Caribbean (LAC) remains one of the world’s most economically unequal regions. Moreover, the region’s progress in inequality reduction appears to have slowed in the second decade of the 21st century. Economic inequality, therefore, remains a key policy priority for many governments and other stakeholders in the severely affected LAC region. Given this state of affairs, this chapter attempts to provide a broad coverage of the issue by surveying the anatomy of inequality, with specific emphasis on the LAC region. This chapter begins by exploring economic inequality from a theoretical perspective to identify the leading views on the subject matter. It then examines the historical basis for high inequality in the LAC region, followed by an outline of alternative methods for measuring inequality. Thereafter, this chapter presents stylised facts on the contemporary state of inequality in the region and examines the main contributory factors. It concludes by recommending policies that could be adopted to promote further reduction in inequality in the region.