POVERTY AND INCOME INEQUALITY IN LATIN-AMERICA DURING THE 1980S

On average, poverty and income inequality increased in Latin America d uring the 1980s. Forty-six percent of the increase in poverty took pla ce in the cities of Brazil alone, though part of this reflects the mig ration of poor rural inhabitants to urban areas. There is strong evide nce that both income inequality and poverty mirrored the economic cycl e, rising during recession and falling during recovery. Economies that grew (e.g. Colombia, Costa Rica) performed better with respect to pov erty and income inequality than those that stagnated. In particular, c ountries that failed to stabilize effectively (e.g. Brazil, Peru) expe rienced substantial increases in poverty. Educational attainment has t he greatest correlation with both income inequality and the probabilit y of being poor. From a policy standpoint, there is a clear associatio n between the provision of education, lessening of income inequality, and poverty reduction.