Globalization and Inequality in Latin America

Chapter highlights:

• Latin American countries are characterized by decades of import substitution policies, large trade liberalization episodes in the 80s and 90s, burdensome labor market regulations, and large informal sectors.

 

• We summarize and comment on findings from a large literature leveraging trade liberalization episodes and rich firm- and worker-level data. We also suggest areas of future work on the inequality consequences of globalization.

 

• Globalization leads to labor market disruption and a long adjustment process. The informal sector plays important role during the transition. Several dimensions of inequality are affected: across firms, workers, sectors, regions, and genders.

 

• The impact of globalization on inequality is rich and nuanced, depending on the specific context and time horizon considered. Researchers should develop unifying frameworks to help synthesize the results of individual studies focusing on distinct aspects of globalization’s relationship to inequality.