Labour Markets and Income Distribution during Crisis and Reform

Abstract

After decades of continuous reduction of income inequality, Cuba at the end of the 1990s seemed to be back at its pre-revolutionary stage of high inequality. Due to the economic crisis of the 1990s, the government was no longer able to provide the population with the same amount of social transfers as before. As a result, the importance of personal income increased. Parallel to this development the Cuban labour market structure underwent a considerable diversification, and different parts of the economy began to offer highly unequal opportunities for income generation. Complementary sources of income deriving from shadow economic activities and remittances, essential for the well-being of large part of the population, further began to distort the transparency of income distribution. Official household surveys on the topic have been classified, and in general only very little has been known about the correlation between the changing labour market structures and the rising income inequality. Nevertheless, in this chapter I will try to shed some light on the recent changes within the two fields. Towards the end I will try to give an estimate of what segments of the Cuban population have been winners and losers from the structural changes.