Social inclusion in Latin America and the Caribbean: a look at recent history

The evolution of social inclusion in Latin America and the Caribbean has been marked by significant fluctuations over the last three decades. After the severe economic crises that affected several countries in the region in the early 2000s, Most of them successfully resumed growth, accompanied by significant improvements in social indicators. In contrast to the 1990s, the new millennium brought with it a notable reduction in poverty and inequality. This was possible thanks to a combination of favorable public policies and a conducive international context (Gasparini, 2019). The boom registered between 2002 and 2012, when an accelerated fall in inequality was observed, faded from 2013 onwards. The fall in poverty was more sustained throughout the period, with a slight slowdown during the 2010s in South America relative to Central America and the Caribbean. More recently, the COVID-19 pandemic was a major setback for all countries in the region, exacerbating pre-existing inequalities.

Poverty does not affect the entire population uniformly. There are marked disparities based on age, gender, region and ethnic origin. According to ECLAC data (CEPALSTAT, 2024)¹, children represent the most vulnerable group, with a poverty rate of 43 % for those under 14 years of age, compared to 15 % for adults over 65 years of age in 2022 (figure 1). Regional gaps are significant within countries: rural areas account for a large share of extreme poverty (17 % compared to 5 % in urban areas) and have poverty rates that are almost double those of cities (39 % compared to 21 %). There are also gender gaps, with a higher incidence among women (25 %) compared to men (24 %) in the region.

Latin America and the Caribbean stand out for their remarkable ethnic and racial diversity. Among the total population, 23 % self-identify as white, 43 % as mestizo, 16 % as Black, 7 % as Indigenous and 12 % in another ethnic or racial group (Albina et al., 2024). Indigenous and Afro-descendant groups face considerably higher poverty rates: 43 % of indigenous people and 24 % of Afro-descendants live in poverty, compared to 21 % of the rest of the population.

Over the past three decades, alongside reductions in poverty and inequality, several social indicators have shown improvements, albeit with different nuances. For example, the region has experienced sustained progress in terms of health, with declines in infant mortality and increased life expectancy at birth. The socioeconomic gaps in these indicators, however, have not closed (Bancalari et al., 2024). Figure 2 presents the average annual variation in the values of another set of indicators, according to population income decile, between 1992 and 2019². The positive values of the indicators reflect improvements for the corresponding decile relative to the base period (1990s), except for the informality indicator, where a negative value signifies improvement with respect to the base period.

We have closed [gaps] in many areas. For example, in education, fertility, the number of children that women have, women’s education and their participation in the workplace, life expectancy, the population in the idea of working as a percentage of the total population.

Based on an interview with Ricardo Hausmann

The expansion in secondary education coverage in all income deciles is noteworthy, accompanied by a closing of gaps between the poorest and richest deciles. These results are consistent with the significant and widespread expansion of basic education across the region during this period. A similar pattern is observed in access to water at home, an essential service with a special impact on health, though the increase has been more moderate. Higher education coverage rose in all income deciles, but this expansion has been especially greater in the higher deciles. This asymmetry is worrisome because it reveals a perpetuation of inequalities, especially when one takes into account that the wage premiums for higher education are substantial.

In the rest of the indicators, the results have been less promising, highlighting where the most unyielding barriers to social progress lie. In terms of labor, informality—which includes unregistered salaried workers, non-professional self-employed workers and unpaid family workers—fell overall, but especially in the highest deciles. In the lower income deciles, this phenomenon remains practically unchanged. Informal jobs, in addition to offering lower salaries and less stability, generate inequalities in access to social protection, which, to a large extent, continues to be linked to formal employment in the region. Finally, the home ownership rate fell in the lower deciles, while it remained constant among the higher deciles. Home ownership, although an imperfect measure because it does not consider, for example, aspects of quality, is a good proxy for household wealth, since for the bulk of the population it is the most important asset of their total wealth (De la Mata et al., 2022).