Income distribution and poverty through crisis and adjustment

Abstract

This article analyses the costs in terms of income distribution of the crisis and adjustments of the 1980s, as well as the effects of the subsequent recovery and resumption of sustained growth patterns. This analysis is based on comparable pairs of estimates of income distribution and poverty prepared by ECLAC for the ten largest and predominantly urban countries of the region. The method of analysis consists, on the one hand, of comparing the changes in distribution and in the macroeconomic and labour market variables during similar macroeconomic phases in the course of the adjustment process in different countries and, on the other hand, of comparing the income distribution situations in each country before and after the adjustment. It is concluded that although economic recovery and the reduction of inflation are relieving poverty situations, medium-term growth without an improvement in income distribution will cause the process of reducing poverty to be excessively prolonged, and there are grounds for believing that the new form of operation and the new rules followed by public policy in these economies may involve still greater inequalities as regards income distribution.