Socioeconomic inequalities in national transfers accounts in Ecuador 2006 and 2011: did a new socialist government make a difference?

Abstract

Latin America is the least egalitarian region in the world. A neo-socialist government in Ecuador prioritized the reduction of socioeconomic status (SES) inequalities. The generational economy is a framework to understand the economic lifecycle and to link demographic change with people’s well-being. This article aims to uncover SES-driven inequalities in the generational economy of Ecuador: did public transfers modify them from 2006 to 2011? National transfer accounts (NTA) were disaggregated by SES quartiles, which were defined by the highest level of education attainment in each household. The accounts within SES quartiles were estimated using standard NTA methods. A pseudo-Gini coefficient summarized SES-driven inequalities by age and generational account. This secondary analysis was based on existing micro databases from the Ecuadorian NTA. Results: National averages do not represent well the generational economy of the low-SES population. The usual gradient of higher economic figures in higher SES strata shows up in almost all NTAs with the notable exceptions of reversal (progressive) gradients in conditional public cash transfers to low-SES households and public education at the elementary school level. Retirement pensions are extremely regressive public transfers, benefiting mostly high-SES strata. Conclusions: Population aging might worsen the high levels of inequality already existing in Ecuador and Latin America. Some progressive public policies worked well to reduce inequality in Ecuador. Contribution: This article demonstrates the importance of uncovering SES-driven inequalities existing in NTAs and their change through the lifecycle. It also identifies public policies that ameliorated inequality as well as public transfers that are regressive.