Income Inequality in Guyana

Working Paper 2022-631

Abstract

This paper utilises recent survey data to estimate income inequality in Guyana from 1990 to 2021. It finds that class-based inequality exceeds ethnic income inequality, and the latter is more pronounced in the top 10 percent of the population. The over-representation of Indo- and Indigenous-Guyanese in the top decile increases class inequality within these groups because Afro- and Mixed-Guyanese are over-represented in the middle 40 and bottom 50 percent of the population. Thus, the magnitude of ethnic income differences violates the principle of distributive justice. The paper tentatively concludes that fiscal policy is the main explanation of the inequality dynamics, for example, the reduction of the middle class’ share of income in 2017. Overall, the evidence indicates that intra-class competition for ethnic dominance of the top decile can account for inter-ethnic conflict, as politicians invest in ethnic prejudice and rivalry to weaken inter-class competition and strengthen the intra-class contest.

Authors: Collin Constantine.