Development and Income Distribution: The Case of Puerto Rico
Author(s)
Sotomayor, Orlando
Abstract
Using data spanning half a century the study addresses the trends and factors behind changes in income distribution in one of the earliest examples of development through integration to the world economy. Results show remarkable income growth that generated an ambiguous long-term change in inequality but a drastic reduction in poverty. Public transfers played a decisive role in restraining growth in inequality and in reducing poverty levels that were also affected favorably by changes in the distribution of female earned income. Finally, although rising schooling levels and their absolute returns increased households’ income generating capacities, the realization of the potential was hindered by increasing levels of unemployment and economic inactivity.
