Trends in income and consumption inequality in Bolivia: A fairy tale of growing dwarfs and shrinking giants Draft - Public disclosure unauthorized

This paper documents and describes the evolution of income and consumption inequality in Bolivia between 1999 and 2011. We find that income and consumption inequality measured by the Gini in- dex both dropped 22% during the period we analyze, making Bolivia the top performer in the Latin American region regarding income inequality reduction. To make a more complete description of this trend, we make separate analysis for the urban an rural area. Changes in urban inequality are driven by changes in the upper part of the distribution, as the 90-50 income and consumption percentile ra- tios fell 24%, as opposed to a 8% fall in the 50-10 ratio, for the subperiod 2005-2011. Changes in rural inequality occur through the entire distribution in similar fashion, but are more intense before 2005, when the 90-50 and 50-10 ratios fell 30 and 26% respectively.