Does Giving Cash to the Poor Reduce Inequality? The Cases of Brazil, Chile, and Colombia

Abstract

Income and wealth inequality has risen in the majority of the globe since the 1990s, except for one region. Latin America has experienced a decline in the gap between the rich and the poor that corresponds to an average six-point drop of the GINI index. In this paper, I reviewed the recent literature that measures the effects that Conditional Cash Transfers (CCTs) had in reducing income inequality in three South American countries: Brazil, Chile, and Colombia. The evidence shows that, alongside a betterment in the job market brought along by economic growth, CCTs have played an essential role in reducing inequality in those countries. As a redistributive policy, CCTs helped increase the income of the poorest without increasing significantly public spending.