Question

Why did so many countries experience a decline in poverty rates in Latin America between 2005-2012?

Answer 1

One of the main reasons of poverty in Latin America is income inequality. During the phase 2003-13, the Latin American countries had a growth in income as well as assets of the households. Average wages increased in aggregate.  Prevailing low wage rate was a result of low mean years of schooling and large number of unskilled workers. In the phase 2005 - 2012, investment was heavily made on the skill formation, education and human capital development. Therefore, wage rate, per capital income and standard of living increased as a chain reaction. Skill development led to self employment for many youths to alleviate abject poverty. Every Latin American countries had their own internal problems. However, these policies are common for almost all countries. Minimum wage law, social security program initiated by government waned the regional inequalities significantly. In Bolivia, the new elected government in 2005 introduced financial incentives to the new mothers for medical care at the pre and post natal stage. During 2000 to 2010, Peru experienced a sharp drop in poverty due to government initiatives for reduction in external debt, high growth rate, macroeconomic stability, low inflation rate.