Inequality and Social Discontent: How to Address Them through Public Policy: Economic Report on Central America, the Dominican Republic, Haiti, Mexico, and Panama

The world economy will experience a major downturn in 2020 due to the COVID-19 outbreak, one that will undoubtedly affect the region. We estimate that, as a result, poverty and inequality will increase, and that the negative impact on peoples income and access to education and health will be felt most by those in poorer households. With this in mind, we look at how public spending benefits people based on their level of income and their position within either the formal or informal economy. We show how an informal sector exists among those on higher incomes that provides an opportunity for redistribution. Furthermore, we discuss the threats to political and social stability posed by high levels of inequality by exploring indicators of polarization, and analyze aspects of political and social inclusion that could help reduce the risk of conflict. We also describe how the priorities and social concerns of the regions citizens have changed as a result of the epidemic. The report concludes with a country-by-country review on the issue of inequality and a number of recommendations on how to address it.