Exceptional Argentina Di Tella, Glaeser and Llach - Thomas Piketty

empirical evidence and on existing studies of the economic and political factors
behind these trends. Section 2 covers the 1932-1973 period and is based mainly on
income tax information, while section 3 covers the years 1974-2007 based on
household survey data. While the availability of the latter allows for a more detailed
analysis at the micro level, the narratives rely on the same implicit models, which
highlight the salience of trade and comparative advantages, the population’s level of
education and the ensuing distributional conflict and its related redistributive policies.
The discussions, thus, cover a series of issues such as trade policy, terms of trade,
taxation, technical change, macroeconomic performance, labor regulations, the power
of unions and structural reforms.
The chapter is organized as follows. Section 2 focuses on the dynamics of top
incomes in Argentina since 1932 based on income tax statistics. Section 3 discusses
the evolution of income inequality over the last thirty years based on survey data.
Section 4 is devoted to the conclusions.
2. An Episodic History of Income Concentration in
Argentina 1932-1973: Evidence from Tax Statistics 3
This section summarizes the dynamics of the concentration of income between 1932
and 1973 based on income tax statistics. 4 Due to the fact that only a small fraction of
the population was subject to the income tax, we can only analyze the very top of the
distribution, as depicted in Figure 1 for the share of the top 1% since 1932.
Nevertheless, this source of information is useful for the study of distributive trends,
covered in sections 2.1 to 2.3, and also allows for international comparisons, which
are described in section 2.4 below.
2.1. The years 1932-1945
3 The results presented in this section are taken from Alvaredo (2010).
4 Our starting point is determined by the source of information: the first personal income tax was
established in Argentina in 1932. Income tax data suffer from some serious drawbacks. The definitions
of taxable income and tax unit tend to change through time according to the tax laws. While there is a
predisposition to under-reporting certain types of income, taxpayers also undertake a variety of
avoidance responses, including planning, renaming and retiming of activities to legally reduce the tax
liability. Capital incomes and capital gains are taxed at different degrees across time. These elements,
which are common to all countries, become critical in developing economies. However, alternative
sources such as household surveys are not free of problems regarding under-reporting, differential nonresponses,
unit design and information at the top of the distribution. Therefore, even if results based on
income tax statistics must be read with caution, especially in the case of countries with important levels
of tax evasion, they can still be informative and remain a unique source to study the dynamics of
income concentration during the first half of the twentieth century.