Fiscal Redistribution and Ethnoracial Inequality in Bolivia, Brazil, and Guatemala

Nora Lustig

doi:10.25222/larr.90

Abstract

Afro-descendants and indigenous peoples in Latin America face higher poverty rates and are disproportionately represented among the poor. The probability of being poor is between two and three times higher for indigenous and Afro-descendants than whites. Using comparable fiscal incidence analyses for Bolivia, Brazil, and Guatemala, I analyze how much poverty and inequality change in the ethnoracial space after fiscal interventions. Although taxes and transfers tend to reduce the ethnoracial gaps, the change is very small. While per capita cash transfers tend to be higher for the nonwhite population, spending on these programs is too low, especially when compared with the disproportionate number of poor people among nonwhites.

Highlights

Ethnic and racial differences in human capital and earnings are one of the key determinants of inequality in Latin America (De Ferranti et al 2004; Hall and Patrinos 2006; Ñopo 2012)
As shown in a series of existing studies that apply the common methodological framework developed at the Commitment to Equity Institute (Tulane University), fiscal policy unambiguously reduces income inequality, albeit to different degrees
Does fiscal policy reduce income inequality between ethnic and racial groups?3 This article analyzes the effects of fiscal policy on inequality along ethnic and racial lines for Bolivia, Guatemala, and Brazil in 2009, the year for which comparable analysis for these three countries is available

Summary

Introduction

Ethnic and racial differences in human capital and earnings are one of the key determinants of inequality in Latin America (De Ferranti et al 2004; Hall and Patrinos 2006; Ñopo 2012). The specific social dynamics faced by Afro-descendants and indigenous peoples differ, both of these populations have systematically higher poverty rates and are disproportionately represented among the poor.1 Fiscal redistribution is one of the policy levers the state has to address ethnoracial inequalities.

Results

Conclusion