Life is Unfair in Latin America, But Does it Matter for Growth?

SummaryI analyze the effect of inequality on economic growth in Latin America, where inequality is measured as the area of family farms as a percentage of the total area of agricultural holdings. Using data from 18 Latin American countries during 1960–2004, I find that inequality has a nonlinear effect on economic growth. Overall, for the countries included in this analysis, the share of family farms has a positive significant effect on economic growth. These findings are robust to controlling for several factors, using a different indicator of inequality (land Gini), and addressing for endogeneity.