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Unformatted text preview: Huynh 1 Cuong Huynh November 18, 2008 ECON 4626 Chile: The Conundrum of I nequality In “Chile: The Conundrum of Inequality,” Chile has been recognized for its increasing growth within Latin America, but it also joined its neighboring countries in having one of the worst income inequality distributions ranking in the world. Chile has been through many policy changes from the time Augusto Pinochet took office until the return of democratic rule. Economic inequality was not ever a concern in the political sector until 2006 following the inauguration of President Bachelet, Chilean citizens emphasized heavily on the significance of equality. From 1974 to 2003, Chile’s Gini Coefficient was averaging at a staggering .57 (Exhibit 7). Chile’s income inequality displayed a huge gap in the percentage shares of income between the bottom and top decile. The poor were deeply impacted by the ruling of military regime as the government decreased public spending on health, education and housing. By 2003, the poorest 10% of Chile only held 1.2% of the total share of income compared to the richest 10% with 41.2% (Exhibit 7). Under Pinochet’s dictatorship, Chileans saw a huge increase in the level of poverty. Huynh 2 A noticeable indication to measure Chile’s income distribution is to look at the poverty level. In 1970, 17% of the Chilean population was in poverty while 6.5% were in the indigent population. By 1987, these percentages more than doubled (Exhibit 8). With this data in mind, social policy failed to place any emphasis on helping the poor. The “Chicago Boys” followed Milton Friedman’s economic ideas which benefit mostly the upper class. Part of the reason for the increase in poverty is the reduction of the average real wage and rising unemployment....
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This note was uploaded on 01/27/2009 for the course ECON 4626 taught by Professor Zax during the Fall '08 term at Colorado.
- Fall '08