Abstract
Using micro survey data, I show that income and consumption inequality fell substantially in Chile since 1987. Consumption inequality between and within groups fell substantially over the last 35 years, especially for within groups. During this period, households' use of financial services increased substantially. Estimating a standard consumption model, the results reject both the autarky and the full risk sharing frameworks. It is found that for services and non-durable goods, consumption is almost half-way between autarky and full risk-sharing. However, purchases of Semi-Durables, Durables, Medical, Insurance, and other financial products are strongly affected by income fluctuations.
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