Income Inequality in Latin America

Children from high-income families acquire more skills than those from low-income families, which creates half of the current generation’s income inequality. But transfers and large wage increases for low-income workers decreased income inequality in Latin America between 2000 and 2010. Latin America relies more on regressive taxes than on progressive ones. –economist.com

Answer the following questions to check your understanding of the story.

What does the news clip suggest is a major source of income inequality in Latin America’s current generation?

How did the Lorenz curve in Latin America change between 2000 and 2010?

Between 2000 and 2010, the Lorenz curve ____________ the line of equality.

How did the Gini ratio in Latin America change between 2000 and 2010?

Between 2000 and 2010, the Gini ratio in Latin America ___________.

How would income inequality in Latin America change with a move from regressive income tax and redistribution to progressive income tax and redistribution?

If Latin America moves to a system of progressive income tax and redistribution, income inequality most likely __________.

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