Redistribution and inequality in Latin America: the case of tax and labour reforms in Chile and Uruguay (2003-2020)

This dissertation analyses the political economy of inequality in Latin America. A large part of the high inequality of this region is explained by the low redistributive impact of the state, especially in the areas of taxation and labour regulation. Hence, I study the factors that shape states’ implementation of fiscal and labour policies with distributive effects. I carried out this analysis through a comparative strategy between Chile and Uruguay during 2003-2020. My work is based on two strands of literature that have extensively analysed development and distribution in Latin America. On the one hand, there is an economically-focused literature coming from post-Keynesian studies, Latin American structuralism, and critical International Political Economy, which argues that the high volatility of Latin American economies generates an unstable availability of resources that would make it difficult to build stable political processes in the long term. On the other, literature more focused on the political-institutional factors and the role of actors has emphasised that the difficulties in building distributive processes are explained by regional weaknesses in consolidating stable but independent linkages between state and society that prevent individual capture and give institutional stability to agreements. I argue that it is necessary to combine these two streams in an integrated way to understand how domestic political institutional factors shape the constraints of the global economy on domestic politics. The empirical analysis shows that since in Uruguay there is significant state-society coordination, distributive processes not only tend to be deeper than in Chile but also tend to be more stable even during economic slowdowns. In contrast, in Chile, the broad influence of business on the state and the low mobilisation of social actors determines a low level of state-society coordination, which generates distributive agreements that are less transformative and less stable than in the Uruguayan case.