wage. Fifth, wage differentials by skill widened, particularly
during the 1990s, in parallel with widespread trade liberalization
(Székely 2003).
In contrast to the trends observed in the 1980s and 1990s, d u r i n g
t h e 2 0 0 0 s income inequality fell in most of the region,
particularly after 2002. Figure 1 shows that during this time, income
inequality declined in 7 of the 8 LOC countries and in 7 of the 10
centre-right regimes. These results are confirmed by a study
by Gasparini et al. (2009) that shows that inequality declined
between the early 2000s and the mid -2000s in 14 of 17
countries analyzed, with the exception of Colombia, Nicaragua and
Honduras. While the average regional decline in the Gini coefficient
was 2-3 points, in countries ruled for most of the 2002 -2007
period by LOC governments, the drop was more pronounced.
Lustig (2009) arrives at a similar conclusion, noting that the decline
among the LOC countries was faster than the decline among the
NO-LOC centre-right regimes. She notes also that among LOC
countries, the decline was more pronounced among the ‘populist’
than among ‘social-democratic-left’ regimes. The recent drop in
inequality was also characterized by greater convergence at a lower
level of inequality, a trend opposite to that experienced during the
prior two decades, when the countries’ Gini coefficients converged
at a higher level of inequality
44. Finally, Figure 1 suggests that the
decline in inequality from 2003 to 2007 was greatest in those
countries which experienced the largest increases from 1990 to
(^44) Gasparini et al (2009) show that the coefficient of variation of national Gini
coefficients fell from 0.10 to 0.07 over 1992-2006.