Monetary Inequality in a Context of Rapid Economic Growth: The Recent Case of Peru

This paper analyzes the evolution of monetary inequality in Peru between 1997 and 2010, a period characterized by rapid economic growth (an average of 5% per year). We find a 13.4% reduction in inequality, as measured by the Gini coefficient calculated using income data from household surveys. We also calculate the Gini coefficient using national accounts data and show that the decline in inequality is robust to potential underreporting in the highest percentiles of the income and expenditure distribution. Finally, we find that the JUNTOS program contributed approximately 25% to the reduction in inequality during the second half of the past decade. Furthermore, we verify how the significant expansion in coverage has allowed the program to maintain its equalizing potential despite the fact that average income in the lower deciles has grown. Among the other factors that have contributed to income equalization, the evolution of labor income stands out, with growth concentrated in the 20th to 50th percentiles. (Audio: Department of Economic Publications)