Latin America is often singled out for its high and persistent income inequality. Toward the end of the 1990s, however, income concentration began to fall across the region. Of the seventeen countries for which comparable data are available, twelve have experienced a decline, particularly since 2000. This book is among the first efforts to understand what happened in these countries and why.

Led by editors Felipe L?pez-Calva and Nora Lustig, a panel of distinguished economists undertakes in-depth analyses of Argentina, Brazil, Mexico, and Peru. In addition, they provide essential background in the form of overviews of the relationship between markets and inequality, the political economy of redistribution, and the evolution of income inequality in the advanced industrialized economies. Two factors account for much of the decline in inequality: a decrease in the wage gap between skilled and low-skilled labor, and an increase in government transfers targeted to the poor.

Thanks to the timeliness and sophistication of these essays, Declining Inequality in Latin America is likely to become a standard reference in its field.

Many of the rules that govern labor markets in Latin America (and elsewhere) raise labor costs, create barriers to entry, and introduce rigidities in the employment structure. These include the exceedingly restrictive regulations on hiring and firing practices, as well as burdensome social insurance schemes. Such labor market regulations contribute to an over-expansion of precarious forms of employment and to rural poverty, and hinder countries from responding rapidly to new challenges from increased foreign competition.

At the same time, other norms can reduce costs and raise productivity; they should be kept in place and their enforcement improved. For example, some occupational health and safety standards lower medical costs and save lives. One may also want to keep legislation aimed at providing a minimum social insurance for unemployment, old age, sickness, and disabilities.

In practice, the most common decision that governments confront is not whether to intervene but to choose among different forms of intervention. This volume provides analysts and policymakers with useful insights on this issue. Part I addresses labor market institutions in a broader context, such as collective bargaining arrangements, minimum wages and poverty, and optimal unemployment insurance schemes. Part II analyzes labor market performance in Latin America, the links between performance and labor market regulations, and the status of labor market reform in the region. These questions are addressed for the region as a whole and in great detail for Argentina, Brazil, Chile, Mexico, and Colombia. The book provides a comprehensive description of the existing labor institutions in Latin America, the problems they pose, and the trends in labor market reforms as well as the difficulties encountered by the reform process in specific cases.

In addition to the editors, the contributors are Edward Amadeo, Jose Marcio Camargo, Alejandra Cox Edwards, Rene Cortazar, Enrique Davila, Marta Lus Henao, Eduardo Lora, Hugo Hopenhayn, Darryl McLeod, Juan Pablo Nicolini, John Pencavel, and Carola Pessino.

The signing of the North American Free Trade Agreement (NAFTA) was expected to signal the beginning of a new era of close co-operation between Mexico and the United States. Subsequent events, however, have introduced new tensions into the relationship. The 1995 economic collapse in Mexico sharply curtailed economic growth and lowered the demand for U.S. exports. The result has been a substantial deficit in U.S. trade with Mexico and renewed arguments that trade with Mexico reduces the employment opportunities of low-skilled workers in the United States. Immigration, both legal and illegal, has grown as a subject of contention between the two countries. Mexico has also come under increased focus as a conduit for the flow of drugs into the United States. In this book, scholars from the United States and Mexico examine the major elements of the bilateral relationship. The economic dimension is highlighted in two papers that focus on the effects of NAFTA on trade and financial transactions. The political and social dimensions are taken up in three papers on immigration, drug trafficking, and environmental concerns. The contributors include J. Enrique Espinosa and Pedro Noyola, SAI Consultores, Mexico; John Williamson, Institute for International Economics; Juan Carlos Belausteguigoitia, Ministry of the Environment, Mexico; Peter Smith, University of California, San Diego; and George Borjas, Harvard University.

The poor in developing countries are particularly vulnerable to adverse shocks. They have little or no access to public social insurance, are unlikely to save in adequate amounts to rely fully on self-insurance or informal insurance, face restricted access to private market insurance or credit mechanisms, and have little or no political voice to demand the protection of safety net programs. In this book, the authors analyze the best ways to help the poor manage risks such as health shocks, unemployment, sudden drops in income, and old age. Unemployment benefits, employment programs, means-tested social assistance, social investment funds, and micro-finance for consumption-smoothing purposes are the leading options considered. The book provides a careful assessment of issues that governments need to address in the process of designing appropriate safety nets.

"Series of well-written articles examines regional poverty and income distribution. Includes separate articles on Argentina, Brazil, Chile, Mexico, Peru, and Venezuela, as well as over 150 tables. Valuable contribution"--Handbook of Latin American Studies, v. 57.

"The proposed North American Free Trade Agreement (NAFTA) represents a historic change in relations among Canada, Mexico, and the United States. The effect of the agreement on the three economies has generated controversy and some degree of alarm within each country. In this book, noted trade and development experts review the available literature on the effects of NAFTA on the three member countries and the world trading system. They evaluate how NAFTA will affect areas such as economic growth, employment, income distribution, industry, and agriculture in Canada, Mexico, and the United States; and consider the significance the trade agreement holds for the rest of the world. Drusill K. Brown begins the discussion by providing an overview and comparison of the general results from recent studies. Raul Hinojosa-Ojeda and Sherman Robinson explore in greater detail the potential effects of NAFTA on wages and employment in Mexico and the United States. Sidney Wintrab reviews industry-specific effects of NAFTA, in particular, the environment, the social agenda, and human rights and democracy. Finally, Carlos Alberto Primo Braga considers the implications of NAFTA on the rest of the world. Following each of these chapters, international scholars assess the alternatives and provide recommendations for future research. "