Economic inequality, policy and performance in the formal sectors of Argentina, Brazil, and Chile : evidence from regional and sectoral data, 1994 to 2007

This dissertation focuses on trends in pay inequality in the formal sectors of Argentina, Brazil, and Chile from the early 1990s into the latter part of the first decade of the new millennium. In-depth, single-country studies of inequality of each country of study seek to understand and explain the sources of movement in inequality in each country, relating changes in inequality to shifts in the relative roles of key economic sectors and geographic jurisdictions. In addition to these single-country studies of inequality, this dissertation develops a regional perspective on the dynamics of inequality by synthesizing findings from the three countries of study, identifying both commonalities and differences. This dissertation also evaluates the relationship between trends in inequality and the macroeconomic policies and factors that influence them. By eschewing the inequality of household incomes and focusing instead on measures of inequality in the underlying distribution of pay, this dissertation presents empirical evidence that fluctuations in countries' inequality levels are intrinsically related to macroeconomic factors. This dissertation applies Theil's T statistic, which belongs to the family of generalized entropy inequality measures, to develop new measures of economic inequality. The calculations presented in this dissertation are performed on data obtained from semi-aggregated datasets in which employment and average wage data organized by economic sectors and geographical jurisdictions, as derived from administrative records. Sectoral analysis shows that the changing levels of overall inequality are explained to a great extent by variations in the performance of a reduced number of "key" high-pay sectors, especially finance, extractive industry and civil service. In terms of the dynamics of geographic distribution, the role of these key sectors is observed in the driving role played by key geographic units: those composed of, or containing, the countries' main metropolitan centers, and those with high concentrations of economic activity in extractive industries.