Secular Tendencies in the Inequality of Earnings in Puerto Rico

Abstract

The purpose of this paper is to analyze, for one developing country alone, two decades of change in the distribution of the earnings of the experienced civilian labor force. As such, it focuses on long-term tend? encies and deals mainly with the distribution of labor income, thereby ignoring the determinants of the distribution of property income among individuals and families.1 The distributive changes examined, caused principally by variations in the industrial and occupational structures as a consequence of economic growth, are estimated via the conventional Lorenz/Gini coefficient measures based on the mean and the variance. During the 1949-1969 period Puerto Rican national income rose around 470 percent in current prices and 270 percent in constant prices; the annual rates of growth in terms of current and constant prices were 9 and 7 percent respectively. Undoubtedly, then, at the aggregate level the economic development of the island was impresr sive, as exemplified by rises in personal income levels ( current dollar per capita personal income rose from $293 in 1949 to $1285 in 1969) and changes in the relative importance of economic sectors (expan? sion of the secondary as opposed to the primary sector).2 Less aggre? gative aspects of economic development are not as easily observable, however, and require considerable research to verify their existence, magnitude, and direction of change. Changes in the distribution of income or of earnings fall into this category.