Fiscal Redistribution and Ethnoracial Inequality in Bolivia, Brazil, and Guatemala

Abstract

Afro-descendants and indigenous peoples in Latin America face higher poverty rates and are disproportionately represented among the poor. The probability of being poor is between two and three times higher for indigenous and Afro-descendants than whites. Using comparable fiscal incidence analyses for Bolivia, Brazil, and Guatemala, I analyze how much poverty and inequality change in the ethnoracial space after fiscal interventions. Although taxes and transfers tend to reduce the ethnoracial gaps, the change is very small. While per capita cash transfers tend to be higher for the nonwhite population, spending on these programs is too low, especially when compared with the disproportionate number of poor people among nonwhites.