Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/299404 
Year of Publication: 
2024
Series/Report no.: 
IDB Working Paper Series No. IDB-WP-01587
Publisher: 
Inter-American Development Bank (IDB), Washington, DC
Abstract: 
The relationship between firms and inequality has been a focus of recent attention globally. This chapter summarizes basic facts about this relationship for Latin America. Unlike advanced economies where superstar firm growth has prompted concerns over disproportionate income growth at the top, the facts we summarize illustrate that the main concern for Latin America is the extreme prevalence of tiny businesses whose workers and owners tend to populate the bottom income segments. The empirical likelihood that these businesses improve their productivity and grow to hire more workers and pay better wages is also very low. The region displays a deficit of employment generation in SMEs, by contrast to both microbusinesses (including self-employment) and large corporations. While the former tend to remunerate both workers and owners with very low incomes, the latter pay high wages but also exhibit low labor shares.
Subjects: 
Inequality
Business Development
Latin America
Labor Force and Employment
JEL: 
E2
J21
O54
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Working Paper

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