Changes in Economic Inequality in Europe and Latin America in the First Decades of the Twenty-First Century

Abstract

This chapter contains a comparative analysis of the changes in the inequality of family income distribution in the last two decades in Latin America and Europe. The study examines the degree to which the economic-productive factors- associated with the primary income distribution-or, on the contrary, the social policies-linked to the secondary distribution-reveal structural differences in economic inequality between regions in the 2000-2017 period. Based on a wide sample of countries, the evolution of inequality is compared within and between regions. The dissimilarity of these behaviours is examined as well as how valid certain economic-institutional factors are to give an account of the changes that occurred within each region. The chapter shows that, in the last two decades of the twenty-first century, Western Europe and Latin America have reduced their economic inequality gap, although following different paths: while inequality decreased in the majority of Latin American countries, an inverse process, although moderate, has been taking place in the majority of Europe. While both trends had national exceptions, the evidence presented helps us to deduce that it was simultaneously due to productive changes and to changes in the growth style, and to transformations in the redistributive efficiency of expenditure on social policies.