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Accounting for Changing Earnings Inequality in Costa Rica, 1980-99

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  • TH Gindling
  • Juan Diego Trejos

Abstract

After declining from the mid-1970s to the mid-1980s, inequality in monthly earnings in Costa Rica stabilised from 1987 to 1992 and then increased from 1992 to 1999. In this article, we use recently developed techniques to measure the extent to which these changes in earnings inequality were the result of changes associated with the distributions of personal and workplace characteristics of workers or the earnings differences associated with those characteristics. We present evidence that the most important cause of the fall in inequality prior to 1987 was a decline in returns to education. Inequality stopped falling in Costa Rica in the 1990s in part because returns to education stopped falling. The most important cause of rising inequality in monthly earnings in the 1990s was an increase in the proportion of workers working a non-standard work week (part-time or over-time).

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Journal of Development Studies.

Volume (Year): 41 (2005)
Issue (Month): 5 ()
Pages: 898-926

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Handle: RePEc:taf:jdevst:v:41:y:2005:i:5:p:898-926

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  1. Horton, Susan & Kanbur, Ravi & Mazumdar, Dipak, 1991. "Labor markets in an era of adjustment : an overview," Policy Research Working Paper Series 694, The World Bank.
  2. David H. Autor & Lawrence F. Katz & Alan B. Krueger, 1997. "Computing Inequality: Have Computers Changed the Labor Market?," NBER Working Papers 5956, National Bureau of Economic Research, Inc.
  3. Gindling, T. H. & Terrell, Katherine, 2004. "Minimum Wages, Inequality and Globalization," IZA Discussion Papers 1160, Institute for the Study of Labor (IZA).
  4. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June.
  5. Funkhouser, Edward, 1998. "Changes in the returns to education in Costa Rica," Journal of Development Economics, Elsevier, vol. 57(2), pages 289-317.
  6. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier.
  7. Berman, Eli & Bound, John & Griliches, Zvi, 1994. "Changes in the Demand for Skilled Labor within U.S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, MIT Press, vol. 109(2), pages 367-97, May.
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Cited by:
  1. Gindling, T.H., 2009. "South-South Migration: The Impact of Nicaraguan Immigrants on Earnings, Inequality and Poverty in Costa Rica," World Development, Elsevier, vol. 37(1), pages 116-126, January.
  2. Chris SAKELLARIOU, 2009. "Changing Wage Distributions and the Evolution of Wage Inequality in Indonesia:1994 – 2007," Economic Growth centre Working Paper Series 0906, Nanyang Technolgical University, School of Humanities and Social Sciences, Economic Growth centre.
  3. Kang, Byung-Goo & Yun, Myeong-Su, 2008. "Changes in Korean Wage Inequality, 1980−2005," IZA Discussion Papers 3780, Institute for the Study of Labor (IZA).
  4. Alejos, Luis Alejandro, 2003. "Contribution of the determinants of income inequality in Guatemala," MPRA Paper 42757, University Library of Munich, Germany.
  5. Ayal Kimhi, 2004. "Growth, Inequality and Labor Markets in LDCs: A Survey," CESifo Working Paper Series 1281, CESifo Group Munich.

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