Argentina: Income Inequality Essay

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Over the past two decades, Argentina has faced a lot of changes in the economic and social sector. In the 1980’s, when Argentina was going through major structural adjustments and going back to the populist regime, income inequality among households was affected by growing unemployment due to past crises. This was reflected on the loss of jobs of a big part of low-income groups and in the increase in differential wages between the rich and the poor. In the late 1980’s, another economical crisis hit the country and it drove it to the hyperinflation period, where the biggest jump to inequality occurred. The 90’s reform brought a restructuring labor system, which only increased even more the unemployment rate and the gap between the high-skilled population and the majority: the unskilled. Finally from the 1990’s to today, the recession that Argentina is still facing, is a product of one crisis after another, this has not only had a negative effect on the inequality trend over the last ten years but it has driven the government to take immediate measures to improve the aggravating situation of today. DEVELOPMENT AND INEQUALITY IN ARGENTINA In order to have a more concise idea of what has been happening in Argentina, it is helpful to look at some statistics. The evolution of the Gini coefficient in Figure 1, which is the most utilized index of inequality, shows the drastic changes over the two past decades. Two clear peaks outstand from the general increasing trend. As mentioned before, the increase in income inequality due to the opening of the economy in the early 1990’s and today’s crisis are the irreversible jumps that marked the situation Argentina is trying to fight. It could never go back to the levels of inequality it once had in 1986, when it is noticeable that it was in a better situation from looking at the Lorenz Curves. It was one of the

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