Poverty, Inequality and Employment in Chile

Produced by: 
International Labour Office
Available from: 
May 2014
Paper author(s): 
Sarah Gammage
Thomás Alburquerque
Gonzálo Durán
Topic: 
Labor
Poverty - Inequality - Aid Effectiveness
Year: 
2014

This paper explores the relationship between labour market institutions, social policy and inequality in Chile from the early 1990s to the late 2000s. The paper analyses levels and changes in poverty as well as wage and income inequality using household and employment survey data and draws some preliminary conclusions about the role of key labour market institutions and policies that have affected the distribution of primary and
secondary income over time. Although poverty has fallen consistently over the period under study, wage and income inequality has risen. The countervailing forces that mitigate wage and income inequality have been largely concentrated in social policy and not labour market policy. We conclude that the profile of poverty and inequality has been consistently altered through targeted social spending, taxes and transfers and not through distribution secured in the labour market. Moreover, the returns to primary and secondary school education appear to have declined for the majority of those in the labour market while the returns to higher levels of education have risen - contributing to widening inequality in the wage distribution.

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