Schooling Inequality, Crises, And Financial Liberalization In Latin America

Latin America is characterized by high and persistent schooling, land, and income inequalities and extreme income concentration. In a highly unequal setting, powerful interests are more likely to dominate politics, pushing for policies that protect privileges rather than foster competition and growth. As a result, changes in policies that political elites resist may be postponed in high-inequality countries to the detriment of overall economic performance. This paper examines the relationship between structural, high inequality - measured by high levels of schooling inequality - and liberalization of the financial sector for a sample of 37 developing and developed countries for the period 1975 to 2000.