Pay Inequality in Cuba during the Special Period

This paper analyzes the evolution of pay inequality in Cuba from the early 1990s through 2004 during what was known as the “Special Period in Times of Peace” and after. We measured pay inequality across sectors and regions using the between-groups component of Theil’s T statistic, and we mapped the changing components of that statistic in order to provide a compact summary of structural change in Cuba. This method has helped us to observe the transition of the Cuban economy from one based fundamentally on sugar to one based largely on services, especially tourism, but also others with greater growth potential, such as information technology, pharmaceuticals, and biotechnology. Regionally, we have observed that a main dividing line between “winners” and “losers” is the presence of tourism and that the recent increase of regional pay inequality is associated primarily with the relative position of Havana’s city and the province of Matanzas. NB: Unless otherwise noted all quotations are translations by the authors.