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Economic Policy Changes and Wage Differentials in Latin America

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  • Jere R. Behrman
  • Nancy Birdsall
  • Miguel Székely

Abstract

This article presents estimates of the impact of changes in liberalization policies on wage differentials by schooling level using a new high-quality data set for 18 Latin American countries for 1977–98. The method controls for all fixed and time-varying country characteristics, some of which may affect the policies themselves. The results indicate that liberalizing policy changes overall have had a short-run disequalizing effect of expanding wage differentials, although this effect tends to fade away over time. This disequalizing effect is due to the strong impact of domestic financial market reform, capital account liberalization, and tax reform. However, privatization contributed to narrowing wage differentials, and increasing trade openness had no significant effect on wage differentials. Technological progress, rather than trade flows, appears to be a channel through which policy changes are affecting inequality.

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File URL: http://www.journals.uchicago.edu/cgi-bin/resolve?id=doi:10.1086/520556
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Bibliographic Info

Article provided by University of Chicago Press in its journal Economic Development and Cultural Change.

Volume (Year): 56 (2007)
Issue (Month): ()
Pages: 57-97

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Handle: RePEc:ucp:ecdecc:v:56:y:2007:p:57-97

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Web page: http://www.journals.uchicago.edu/EDCC/

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Cited by:
  1. Hanushek, Eric A. & Woessmann, Ludger, 2009. "Schooling, Cognitive Skills, and the Latin American Growth Puzzle," IZA Discussion Papers 4576, Institute for the Study of Labor (IZA).
  2. Hanushek, Eric A. & Woessmann, Ludger, 2012. "Schooling, educational achievement, and the Latin American growth puzzle," Journal of Development Economics, Elsevier, vol. 99(2), pages 497-512.
  3. Binelli, Chiara, 2014. "How the wage-education profile got more convex: evidence from Mexico," Discussion Paper Series In Economics And Econometrics 1404, Economics Division, School of Social Sciences, University of Southampton.
  4. Montes-Rojas, G. & Acosta, P., 2013. "Informal Jobs and Trade Liberalisation in Argentina," Working Papers 13/10, Department of Economics, City University London.

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