Skill%20Premium%2C%20Labor%20Supply%20and%20Changes%20in%20the%20Structure%20of%20Wages%20in%20Latin%20America

Working Papers

Skill Premium, Labor Supply and Changes in the Structure of Wages in Latin America


CODE: IDB-WP-786
AUTHOR(s): Fernández, Manuel , Messina, Julián
PUBLISHED: March 2017
LANGUAGE: English
RELATED TOPICS: Poverty Reduction and Labor
DOWNLOAD FILE IN: English

Abstract:

Earnings inequality declined rapidly in Argentina, Brazil and Chile during the 2000s. A reduction in the experience premium is a fundamental driver of declines in upper-tail (90/50) inequality, while a decline in the education premium is the primary determinant of the evolution of lower-tail (50/10) inequality. Relative labor supply is important for explaining changes in the skill premiums. Relative demand trends favored high-skilled workers during the 1990s, shifting in favor of low-skilled workers during the 2000s. Changes in the minimum wage, and more importantly, commodity-led terms of trade improvements are key factors behind these relative skill demand trends.

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