Income Distribution in Uruguay: The Effects of Economic and Institutional Reforms INCOME DISTRIBUTION IN URUGUAY: THE EFFECTS OF ECONOMIC AND INSTITUTIONAL REFORMS

This paper is concerned with distributive aspects of crucial economic and institutional reforms experienced by earners of several income sources in Uruguay after the late eighties. These reforms involved both the labor market and the pensions system, and we provide empirical evidence about the different way they affected the distribution of income. The distribution of income across all earners at the end of the eighties exhibited two well-distinguished poles, each associated with one income source. This bimodality faded with time during the nineties due to the general improvement in retirement pensions, and polarization by income sources. In the same period we find in the case of labor earnings a net transfer of population mass from the middle of the distribution to both extremes, which results in increasing polarization within this income source. ([email protected]). We acknowledge comments from seminars of the Social Economics Network for Latin America held at Montevideo and Panama, as well as a seminar at Universidad de la República (Uruguay), both financed by Sida/SAREC (Sweden).