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Title:Financial development and the distribution of income in Latin America and the Caribbean PDF Logo
Authors:Canavire-Bacarreza, Gustavo
Rioja, Felix
Issue Date:2008
Series/Report no.:IZA discussion papers 3796
Abstract:One of the central concerns in Latin America and the Caribbean (LAC) has been the reduction of poverty and inequality so prevalent in the continent. Using large world samples, the literature has found that financial development increases economic growth, increases the income of the poor, and reduces inequality. This paper studies the effects of financial development on the whole distribution of income in LAC. We find that the income of the poorest quintile has not been affected by expansion in the financial system. However, we do find that financial development has had a disproportionate positive effect on the incomes of the second, third and fourth quintiles. We also find some evidence for the Greenwood-Jovanovic (1991) hypothesis that this positive effect only begins after a country crosses a certain economic development threshold.
Subjects:Distribution of income
financial development
inequality
JEL:O11
Persistent Identifier of the first edition:urn:nbn:de:101:1-20081126704
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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