The extent to which Latin America was one of the most unequal continents of the world during the last 5 centuries has been a matter of debate in recent literature. After the arrival of Spanish colonizers in 1492 this continent, during the sixteenth and seventeenth centuries, indigenous population suffered from high epidemic mortality and around 80% died (Livi-Bacci 2006). This fact and a demographic regime characterized by low population densities implied that natural resources were abundant at the per capita level. The Malthusian hypothesis born from European overpopulation never operated in this context. In this framework of low demographic pressure and abundance of natural resources the main activities were organized in the form of big mining or agrarian firms. During the late nineteenth-century world globalization period the continent specialized in the exports of products such as sugar, cocoa, coffee, cattle, and other mining products demanded by the European urbanization and the industrial revolution. All these products enjoyed large economies of scale and therefore the optimal way to produce them was in the form of big firms and plantations. The high levels of property concentration were therefore a characteristic feature of the economy of the continent in the period under consideration (Engerman and Sokoloff 2012; Camps 2013).
In a recent paper on worldās trends of wellbeing inequality in the long run Prados de la Escosura (2018) states that while in terms of income there was an increase of inequality until the third quarter of the twentieth century, in terms of human capital (health and education ) inequality fell since World War I. In this book, we present the results based on some of the data on inequality built by Prados de la Escosura (2007) for the Americas.
Engerman and Sokoloff (2012) have stressed that the aforementioned economic picture of high levels of property concentration reinforces the hypothesis that levels of income inequality were high since the colonial period and afterwards. The high levels of concentration of factor endowments, land and labor, exogenous factors of the production function, implied the very unequal distribution of income . Furthermore the economic institutions created to afford transaction costs in this context perpetuated economic inequality . According to these authors the main institutions were those dealing with education , land property, and political rights such as the right to vote. In sharp contrast with the United States were soon a dense network of public schools depending on the local governments were created in Latin America the educational institutions were financed by the central government and were addressed to educate the children of the colonial elites. We already mentioned that land property was concentrated in a few hands. Regarding the right to vote only the literate population could make use of it. And we already mentioned that the education supply was restricted to the children of the colonial elites. Both endowments and institutions were responsible for the high levels of inequality reached in Latin America, according to these authors.
Acemoglu et al. (2011) and Acemoglu and Robinson (2012) also stress the different role of institutions in North and South America when explaining the sharp contrast in the levels of welfare and wellbeing attained in both parts of the continent. While in North America inclusive and democratic institutions prevailed since the colonization era, in Latin America institutions were and continue to be extractive. This different nature of the institutions explain according to the authors the different levels of wellbeing and welfare in both parts of the Americas up to the present and have their origins in the colonization period.
Contrasting with Engerman and Sokoloff, Williamson (2010, 2015) argues that in the first centuries of the colonial period the levels of per capita GDP of Latin American societies were too low to generate enough surplus that could be extracted by the elites causing high levels of inequality and that therefore by then levels of inequality were low, and not higher than those of Europe, North America, and other continents. Since levels of income in Latin America were lower than those of the European metropolis, the extraction rate and inequality levels were also lower. His hypothesis is that Latin American levels of inequality increased later during the seventeenth and eighteenth centuries, as measured by Gini coefficients, but they were not higher than those of the European metropolis. Therefore high levels of inequality were not a characteristic feature of Latin America. According to this author, levels of inequality only increased later, after the 1870s, because of the first world globalization wave that was made possible by the transport revolution. Overpopulation in Europe caused by the demographic transition fostered an important immigration inflow in the Americas, North and South. The huge migration movements changed the preexisting balance of production factors. Immigration implied the increase of the labor supply and therefore the trend of real wages to diminish. On the other hand, a more intensive use of land and the increase of its demand caused an upward trend in the value of rents. The wage/rental ratio decreased as a result of these global movements of production factors and this caused the increase of inequality levels that reached a maximum by this period. But this was caused by market forces and was made possible by the transports revolution (Hatton and Williamson 1998). Afterwards, according to Williamson (2015), Latin America missed the twentieth-century leveling trend which was apparent in North America and in capitalist societies during the Golden Age. It was this fact and not the colonial heritage that resulted in relative higher levels of inequality in LAC. As a result of this aforementioned trend, Latin America was the continent with the highest inequality by the end of the twentieth century.
On the other hand, Coatsworth (2008) sta...