
Contents
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13.1. INTRODUCTION 13.1. INTRODUCTION
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13.2. WHAT THE DATA SAY 13.2. WHAT THE DATA SAY
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13.3. FACTOR SHARES, FACTOR PRICES, AND OIL BOOMS 13.3. FACTOR SHARES, FACTOR PRICES, AND OIL BOOMS
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13.3.1. The Explanation 13.3.1. The Explanation
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Factor prices Factor prices
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Alternative institutional structures Alternative institutional structures
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Factor ratios Factor ratios
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13.3.2. Patterns of Physical Capital Accumulation 13.3.2. Patterns of Physical Capital Accumulation
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13.3.3. Patterns of Human Capital Accumulation 13.3.3. Patterns of Human Capital Accumulation
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13.4. OTHER INFLUENCES ON INCOME DISTRIBUTION 13.4. OTHER INFLUENCES ON INCOME DISTRIBUTION
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13.4.1. 1980–7: Macro Policy and Capital Flight 13.4.1. 1980–7: Macro Policy and Capital Flight
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13.4.2. Trade Reform 13.4.2. Trade Reform
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13.4.3. Financial Crises 13.4.3. Financial Crises
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13.5. LABOUR'S LOSS OF POWER AND THE POLITICAL ECONOMY OF INEQUALITY 13.5. LABOUR'S LOSS OF POWER AND THE POLITICAL ECONOMY OF INEQUALITY
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13.6. CONCLUDING COMMENTS 13.6. CONCLUDING COMMENTS
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References References
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13 Factor Shares and Resource Booms: Accounting for the Evolution of Venezuelan Inequality
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Published:March 2004
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Abstract
This is the second of five country case studies on income inequality, and shows that income inequality in Venezuela has significantly worsened during the past 27 years; in particular, the worsening has taken the form not of higher inequality among workers, but of higher inequality between those who own and those who do not own capital. Factor shares (shares of factors of production) have moved decisively against labour during the last three decades, resulting in a transfer of approximately 15% of GDP from labour to capital income: the data show an average worker in the late 1990s to be roughly half as well off in terms of income as an average worker in 1970. The chapter examines several possible explanations for the change in income inequality. It has six sections: Introduction; What the data say; Factor Shares, Factor Prices, and Oil Booms—an attempt to explain the evolution of factor shares on the basis of the evolution in human and physical capital accumulation; Other Influences on Income Distribution—an examination of alternative influences on factor shares; Labour's Loss of Power and the Political Economy of Inequality—an in‐depth discussion of the loss of political power by the Venezuelan labour movement and the relationship of this with the main hypothesis presented by the chapter; and Concluding Comments. The main thrust of the explanation offered is that the increase in Venezuela's income inequality can to a great extent be traced back to the decline in the country's physical capital stock and its rigid production processes, although policies such as trade liberalization, contractionary macropolicies, and capital account convertibility have made a far from negligible additional contribution.
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