This report seeks to explain the over-time trends in wage inequality in Latin America and the Caribbean (LAC) since the mid-1990s.
It explains how wage inequality has been associated with household-income inequality in LAC in the past decades, and discusses
how labor-supply and labour-demand trends have affected wage inequality.The Latin American region achieved something truly
remarkable during the 2000s: it sustained vigorous economic growth with declining inequality. Other regions in the world grew
strongly during this period, but this growth was not shared equitably. However, lower commodity prices and slower growth in
China have reduced Latin America's growth prospects in recent years. At the same time, inequality reduction has halted in
many countries. As the new low-growth scenario hits labor markets, it is important to ask whether the social gains of the
2000s can be sustained. Will lower wage growth occur across all segments of the wage distribution in Latin America, or will
the slowdown disproportionately hurt those who have less? Will the economic slowdown put the brakes on the reduction of wage
inequality in Latin America? To answer these forward-looking questions and to know what to expect, it is essential to understand
the causes of the observed changes in wage inequality in the past decades, which is the focus of this research project.