Theme Three

Inequality and Markets

Trends in inequality have been mostly driven by labor market developments, yet the driving forces of the recent decline in wage inequality are not fully understood. Transitions into and out of informality generate inequality in access to services like healthcare, pensions and unemployment insurance, but we know little about how these are determined and why.

The study of workers’ informality cannot be disentangled from the study of the distribution of firms. Markups and product market concentration are high in the region. Because business ownership is highly concentrated, rents in the goods markets likely contribute to the concentration of income at the top of the distribution. Firms may also contribute to high levels of income inequality. By reducing wages, firms’ markdowns in the labor market are a potential source of lower labor share and interpersonal inequality.

The third theme focuses on the relationship between markets (for labor, capital and goods) and inequality. It studies the extent to which the labour market constitutes a fundamental driver of earnings and income inequality, and then explores the relationship between firm size distribution and competition in different goods markets in order to understand wage dispersion and inequality of capital incomes.

What are the implications of labor market turnover on inequality?


How is firm size distribution related to personal income distribution? Click on the links below to delve deeper into inequality and market dynamics in LAC with our working papers:

Firms and inequality in Latin America

Inequality and market power in Latin America and the Caribbean

Labor market turnover and inequality in Latin America

Minimum Wage Policy and Inequality in Latin America and the Caribbean

Globalization and Inequality in Latin America


Panel Members

Julián Messina (300x300)

Julián Messina

Universidad de Alicante

Richard Blundell (300x300)

Richard Blundell

University College London and Institute for Fiscal Studies (IFS)

Santiago Levy (300x300)

Santiago Levy

Brookings Institution


Raquel Fernandez

New York University

Marcela Eslava (300x300)

Marcela Eslava

Universidad de Los Andes

Andres_Velasco 400x400

Andrés Velasco

London School of Economics and Political Science

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