CHILD POVERTY AND INEQUALITY: THE WAY FORWARD

Variable name Variable label Source Unit of Measure

Capital flows Portfolio investment/GDP ECLAC Percentage of
GDP
REER Index of Real Effective
Exchange Rate

Econ Survey of

L. America and

the Caribbean

Index, 2000=100

Min-wage* (1 -
% inform
sector)

Minimum wage index

multiplied by 1 minus the

share of informal sector

workers on the total

ECLAC Min wage Index,

2000=100

Informal sector

Direct tax
Taxes on income, profits,
capital gains, property/ GDP

ECLAC Percentage of
GDP
Indirect tax (General taxes on goods and
services + taxes on specific
goods and services) / GDP

ECLAC Percentage of

GDP

Public exp. on
social security

Public expenditure on social

security and social assistance /

GDP

ECLAC as a percentage of

GDP

Q5/Q1
Pensions

Ratio of pensions coverage

between the top and the

bottom quintile

Rofman et al.

(2008)

Ratio

LOC Countries with left of centre
regimes

Authors’

compilation

1 (LOC), 0 (center-

right)

The explanatory variables included in the regression analysis are

described in Table 10. They belong to five sets of explanatory

factors: (i) initial conditions (proxied by Gini 1990, and expected

to have a positive sign in regression, as current inequality changes

only gradually in relation to its past values); (ii) the impact of the

current business cycle measured by the growth rate of GDP per

capita expected ex ante to have a negative sign; (iii) the distribution

of human capital (i.e. the Gini coefficient of the distribution of

years of education among workers, expected ex-ante to reduce

inequality); (iv) external conditions i.e. international terms of

trade, migrant remittances, FDI, and portfolio flows (all of which

have ex-ante an uncertain, and possibly non-significant, direct impact

on inequality, other than the effects mediated through GDP growth

and other variables); and (v) public policies. These include the

Real Effective Exchange Rate (REER) which proxies macro

policy, and which is expected to reduce inequality for the reasons

given in Part 3, and the minimum wage (expected ex-ante to reduce

Source: authors’ compilation