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KeystoReduceInequalityOpinionSur

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RevistaMensualyGratuita
N81,May2010
Development
KeystoReduceInequality
ErnestoCohen
Alltheversionsofthisarticle:espt
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Therelationshipsbetweenwealthgenerationanddistribution,andthe
reviewofthedeterminingfactorsofinequalityandsocialspendinghelp
usdrawasetofconclusionsregardingthedistributiongap.Ifthe
prevailingviewinacountryistheonethatdeemsitaprioritytocarry
outstructuralreformsinvolvingredistributionsofkeyassets,the
governmentismorethanlikelytotendtogivepreferencetopolitical
fightstothedetrimentofeffortstoimprovethedesignand
implementationofsocialpoliciesthatonlypayoffafterpersistentlong
termactions.If,conversely,wearecapableofseparatingpolitical
electoraltimesfromtheperiodsdevotedtoexercisinggovernancevia
efficientandeffectivepolicies,theeconomic,socialandinstitutional
conditionscanbecreatedtoensuretheachievementofsustainable
economicgrowthinthelongterm.
Inthefirstplace,itshouldbesaidthataimingat"endingsocialdifferencesand
inequalities"isautopiangoal.Itdoesmakesense,however,tobelievethatitis
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positivetoreducetodaysdifferences,andthatthismaybeconducivetoa
betterfunctioningofsocietyasawhole.
Asfarasincomedistributionisconcerned,itisrepetitivelysaidthatLatin
Americaistheworldsmostunequalregion:itstop10%concentrates,inmost
countries,morethan35%oftheincomeand,ingeneral,theincomeofthat
layeris20timesgreaterthanthatofthelowest40%.Noprogresshasbeen
madeintermsofinequalityreduction.
InequalityDeterminants
Itisnecessarytomakeclearthateconomicinequalitywillnotbereducedinthe
shortterm.Itstemsfromasetofdeterminantsthathavetodowithwealth,
educationalandoccupationalaspects,whicharehardtobechangedandusually
takeconsiderablylongperiodsoftimetobemodified.
(i)Wealth
WealthinLatinAmericaisevenmoreconcentratedthanincome.Forlong
periods,thepoliticalagendashavenotincludedproposalsdesignedtomodify
assetownership.Insomecountriesandduringcertainperiods,largescale
agrarianreformswerecarriedoutand,today,theinitiativehasreappearedin
othercountries.ThelatestBrazilianadministrationshavetakenstepsinthat
direction,inresponsetothedemandsoftheSemTerraMovement,
expropriatingfarmingestatesanddistributinglands.Likewise,inBolivia(where
amajoragrarianreformhadalreadybeenadoptedin1852duringthePaz
Estenssoroadministration),Ecuador,ParaguayandVenezuela,similarprojects
arebeingcontemplated.Thelikelihoodoftouchingothertypesofassets
(businessownershiporstockholding)isremote.
Theonlyassetoverwhoseredistributionthereseemstoexistconsensusis
education,understoodashumancapital,thepossessionofwhichwillenhance
individualschancestogetawellpaidjobwhich,inturn,willbenefitsocietyasa
wholebymakingitmoreproductiveandcompetitiveinaninternationalized
market.
(ii)Education
Theeducationalfactorisalsodecisivewhenexplainingincomedifferences.
Thereexisthugeeducationalinequalitiesamongtheregionspopulation.Those
havetodo,ontheonehand,withschools(howtheywork,durationofthe
schoolday,andacademicquality)and,ontheotherhand,withextraschool
factorsinheritedfromstudentshomes(theirsocialandeconomiclevel,possible
houseovercrowding,educationalenvironmentathomewhichisrelatedtothe
yearsofschoolingoftheadultslivinginitandevenwiththefamily
organization,i.e.,whetheritisasingleparentortwoparentfamily,andthe
typeofunionthatcharacterizesit).Thenumberofyearsofeducationthata
personhasdeterminesthetypeofjobhemaygetwhenjoiningthelabor
market.Anditisthroughtheparticipationinthismarketthattheworkergets
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theincometomeethisown,andhisfamilys,needs.
Schoolconditionsthepossibilityofreducinginequitybyprovidingchildren
comingfromdifferentsocioeconomiclevelswithverydifferenteducational
tools.Onlyhalfofthosewhostartprimaryschoolfinishthecycleandthosewho
dosohaveanaverageperformancewhichiswaybelowthatofhisorherpeers
inindustrializedcountries.Nowadays,theeducationalthresholdconsistsof12
yearsofformaleducation.Thosewhohaveachievedsuchlevelcanaspireto
workpositionsfurnishingthemwithanincomethatplacesthemabovethe
povertyline.Educationaldevaluationshouldalsobetakenintoaccount.When
theamountofpeoplewithschoolinggrows,competitionintermsofworkposts
becomeshigher.Thisfactorforcespeopletorelyonmoreyearsofstudyin
ordertodifferentiatefromthosecompetingforthesamejob.Theavailabilityof
peoplewithhigherinstructionmakesitpossibletodowithoutthosewhoare
lesseducatedevenfortasksthelattercouldappropriatelyfulfil.Repetitionrate
ishighanddesertionisstrong.Outofthe9millionLatinAmericanchildrenwho
enterschoolannually,around4millionfailinthefirstyear.Theadditionalcost
ofteachingthosewhohavefailedreachesUS$4.200millionannually.
Animportantshareofincomeinequalitycanbeaccountedforbytheeducational
achievementsdifferences.Thishaspositiveaspects.Itimpliesthatthemarket
rewardstheeducatedandthisconstitutesastimulusforfamiliesandpeopleto
beinterestedinhavingtheirmemberstakethemostoftheeducationaloffer.
Also,educationisanassetthatcanbedistributedwithouthavingtodenyitor
takeitawayfromothers.Humancapitalincreasemainlybasedonmore
educationisfundamentalinordertoensurethecontinuityofeconomicgrowth
inthelongrun,onmoremodernbases.
Likewise,therearemajordifferencesintheproportionofyouthbeingbetween
25and29yearsoldfromlayersIandVwhohavebeenabletoattendeachone
ofthethreelevelsoftheeducationalsystem.
Emphasisisofteninsistentlyplacedontheimportanceofeducationasawayof
ensuringcompetitivenessandimprovingincomedistribution.Nodoubt,thisisa
soundrecommendation,buttheeffortsmadetodayinthatdirectionwillnot
translateintoimmediatedistributionimprovements.Asworkforceturnover
occursatapaceof2%or3%ayear,80%oftheworkerswhowillbeemployed
bytheendofthenextdecadehavealreadyjoinedthelabormarket.These
workerswilldrawnogainfromtheimprovementsattainedintheeducational
system,asthesearepreciselytargetedtoindividualswhohavenotenteredthe
labormarketyet.
(iii)Occupation
Thereexistgrowingdifferencesastoemploymentqualityandremunerations.
Theystemfromtheregionsheterogeneityinproductivityterms.Employment
generationisaseriousregionalweakness.Fewjobsarecreatedinthemodern
sectoraverysignificantproportionofthenewjobsarecreatedinservicesand
SMBs.Anotherportionoflabormarketnewcomers,thosewithlittleeducational
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capital,seekrefugeintheinformalsector.
TheselabormodalitiespresentatLatinAmericaneconomiesareaccompanied
bydifferentoccupationaldensities(numberofemployedindividualper
household)atthehigherlayersandthelowerones:theformerhavetwiceas
manyemployedindividualsthanthelatter.Hence,ingeneral,thehouseholds
withlargernumberofmembershavefewerincomeearnersand,therefore,
lowerpercapitaincome.
Anothermajorfactorcontributingtoincomeinequalityisthegrowing
compensationgapbetweenprofessionalsandformalandinformalwageearners.
Thesedifferencestendtobroadenveryquickly.Inthreemomentsinthe90sit
canbeseenhowthisgapgrowsdramatically.
JOBCOMPENSATIONGAPSBETWEENPROFESSIONALSANDFORMALAND
INFORMALSALARIEDWORKERS

Insum,thebesteducatedcanaccessmoreproductiveandbetterpaidjobs.In
addition,theirpartnerstendtohavesimilarcharacteristics.Therefore,the
coupleaccumulateseducationyears,andthisisconducivetoaneducational
environmentathomethatwillfavortheschoolperformanceofthefewchildren
theywillhaveandahigherhouseholdpercapitaincome,becausetheyhavefew
children.Conversely,thoseatthebottomoftheincomedistributionscalehave
littleeducation,whichonlyqualifiesthemtoobtainhardlyproductive,poorly
paidjobs.Inaddition,thesefamilieshavemanychildrenandfewersalaried
members,who,inturn,canonlygethardlyproductiveandpoorlypaidjobs.All
thesefactorscontributetothelowpercapitaincomeofthesehouseholds.
WealthGenerationandDistribution
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InLatinAmericathereexistdifferentviewpointsabouttherelationshipbetween
wealthgenerationanddistribution.
Onefirstpositionclaimsthatintheregionscountriesthereiswealth,though
thesameispoorlydistributed.Thecountriesarerichwhiletheirinhabitantsare
poorbecauseonesocialgroupthenonpeopleappropriatesthatwealthby
exploitingtherestofthepopulation.Suchdiagnosisleadstothepursuitofa
radicalredistributionshift.Insomecasesthisconnectionbetweendiagnosisand
proposalsbecomesmorecomplicatedbecausetheStateistheownerofthe
nationalwealthand,atthesametime,istheonethatshouldleadthechange
process.Whenthisrationaleprevails,socialpolicylosespreeminence.Focusing
ontaskssuchasthedesignandimplementationofrationalsocialprograms
becomesirrelevant.Ifstructuraltransformationtakesprecedence,thereisno
doubtthatsocialpolicyisshelved,asitrequireslongtermvisionandobjectives
withinstableandreasonablyclearconditions.
Fromadifferentperspectiveonthewealthdistributionrelationship,wealthcan
onlyexistwhenadailyeffortismadetorecreateit.Thesepostulatesserveas
thebasis,ontheonehand,forthepositionthatgrowthistheonlythingthat
matters.As1995EconomicsNobelPrizelaureateRobertLucassaid,oncethe
impactofeconomicgrowthisperceived,theanalystistemptedtofocusonthat,
andceasestoconsiderothervariables.However,weshouldinsistonthe
importanceofsocialpolicy(education,health,housing,etc.),becausethe
incorporationofhumancapitalisaprerequisiteforeconomicgrowth.One
corollaryofthisviewpointisthatpoliticaldecisionsshouldsafeguardthe
continuityofproductiveprocesses,preventinginvestmentandjobgeneration
disincentives.
Insum,theinterpretationsnowinvogueaboutthewealthgeneration
distributionrelationships,ontheonehand,andthereviewofthefactors
determininginequalityandpublicspending,ontheotherhand,canbeusedto
drawasetofconclusionsinregardtothedistributiongap.
(i)Iftheprevailingviewinacountryistheonethatdeemsitaprioritytocarry
outstructuralreformsinvolvingredistributionsofkeyassets,thegovernmentis
morethanlikelytotendtogivepreferencetopoliticalfights(constitutional
reforms,changesingovernmentstructure,reelectionattempts,etc.)tothe
detrimentofeffortstoimprovethedesignandimplementationofsocialpolicies
thatonlypayoffafterpersistentlongtermactions.
ii)If,conversely,wearecapableofseparatingpoliticalelectoraltimesfromthe
periodsdevotedtoexercisinggovernanceviaefficientandeffectivepolicies,the
economic,socialandinstitutionalconditionscanbecreatedtoensurethe
achievementofsustainableeconomicgrowthinthelongterm.
en
es
pt
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