This chapter studies the determinants of changes in labor and non-labor income inequality from a microeconomic perspective to help design and formulate public policies that improve the situation of income inequalities in Colombia. The study is carried out for the nation and the 23 major cities and their metropolitan areas. The authors use a micro-decomposition methodology, which allows comparisons of income distribution changes over time. The results show that income inequality in Colombia dropped during the 2010s. Labor income accounted for most of this change. Returns to education and the stock of human capital were the main drivers of the reduction in inequalities in labor income, while non-labor income inequality also fell during this period, driven mainly by rental income.
