Mind the Gaps: Exploring the Interactions between Political and Economic Inequality in Latin America

A common argument in the literature is that political and economic inequality reinforce each other to create a negative equilibrium. Latin America is a good example of this negative feedback loop: a powerful elite has historically influenced public policy in its favor, thus contributing to economic inequality. Yet does higher political inequality always go together with higher economic inequality in practice? What are mechanisms linking one type of inequality with the other? This research addresses these questions, studying the cross-country relation between political and economic inequality through cluster analysis and exploring some of the causal mechanisms through a comparative case study of in Chile, Honduras and Uruguay. Drawing on insights from structuralist economics and comparative political economy, the research highlights the central role of labor markets in mediating the two types of inequality and makes proposals to advance towards more equitable outcomes in the future.