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Jobs for Justice

SANTIAGO – “Do you feel it trickle down?” ask the protesters occupying Wall Street and parts of financial districts from London to San Francisco. They are not alone in their anxiety. Income inequality is a top concern not only in tent cities across the United States, but also among street protesters in Taipei, Tel Aviv, Cairo, Athens, Madrid, Santiago, and elsewhere.

Inequality almost everywhere, including China, has become so extreme that it must be reduced. Protesters, experts, and center-left politicians agree on this – and on little else. The debate about inequality’s causes is complex and often messy; the debate about how to address it is messier still.

In the rich countries of the global north, the widening gap between rich and poor results from technological change, globalization, and the misdeeds of investment bankers. In the not-so-rich countries of the south, much inequality is the consequence of a more old-fashioned problem: lack of employment opportunities for the poor.

In a forthcoming book, University of Chile economist Cristóbal Huneeus and I examine the roots of inequality in Chile and elsewhere in Latin America and come away with three policy prescriptions: jobs, jobs, jobs. In the last quarter-century, Chile managed to consolidate democracy, triple per capita income, and achieve the highest living standards in Latin America, with near-universal coverage in health care, education, and old-age pensions. Yet the gap in the labor incomes of rich and poor has barely budged.