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Chilean labor market efficiency: an earning frontier approach

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  • Sergio Salas Landeau
  • Dante Contreras

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Abstract

In this paper, we use the econometric frontier approach to estimate efficiency measures of the transformation of human capital into earned income in the Chilean labor market for the period 1957-1998. We find that the mean efficiency is 75%, and that it has been imporving over time. We also find evidence of detrimental effects of non market oriented governments on these efficiency measures. Some evidence is also founded about the effects of health on efficiency, the existence of labor market segmentation and the importance of "social networks". Finally we calculate correlation measures and causality tests between the estimated efficiencies and the rate of growth of GDP, finding a statistical precedence of the later to the former. We give then an eppealing explanation for this results.

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Bibliographic Info

Article provided by University of Chile, Department of Economics in its journal Estudios de Economia.

Volume (Year): 30 (2003)
Issue (Month): 1 Year 2003 (June)
Pages: 87-102

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Handle: RePEc:udc:esteco:v:30:y:2003:i:1:p:87-102

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Web page: http://www.econ.uchile.cl/
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Related research

Keywords: Efficiency; Labor; Frontier approach; Chilean labor market.;

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  1. David H. Autor & Lawrence F. Katz & Alan B. Krueger, 1998. "Computing Inequality: Have Computers Changed The Labor Market?," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1169-1213, November.
  2. Ashenfelter, Orley & Krueger, Alan B, 1994. "Estimates of the Economic Returns to Schooling from a New Sample of Twins," American Economic Review, American Economic Association, vol. 84(5), pages 1157-73, December.
  3. Greene, William H., 1980. "Maximum likelihood estimation of econometric frontier functions," Journal of Econometrics, Elsevier, vol. 13(1), pages 27-56, May.
  4. David Card, 1993. "Using Geographic Variation in College Proximity to Estimate the Return to Schooling," Working Papers 696, Princeton University, Department of Economics, Industrial Relations Section..
  5. Fried, Harold O. & Lovell, C. A. Knox & Schmidt, Shelton S. (ed.), 1993. "The Measurement of Productive Efficiency: Techniques and Applications," OUP Catalogue, Oxford University Press, number 9780195072181.
  6. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
  7. Greene, William H., 1990. "A Gamma-distributed stochastic frontier model," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 141-163.
  8. Basch, Michael & Paredes-Molina, Ricardo D., 1996. "Are there dual labor markets in Chile?: empirical evidence," Journal of Development Economics, Elsevier, vol. 50(2), pages 297-312, August.
  9. Lam. D. & Schoeni, R.F., 1996. "Effects on Family Background on Earnings and Returns to Schooling: Evidence from Brazil," Papers 96-13, RAND - Reprint Series.
  10. Jondrow, James & Knox Lovell, C. A. & Materov, Ivan S. & Schmidt, Peter, 1982. "On the estimation of technical inefficiency in the stochastic frontier production function model," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 233-238, August.
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Cited by:
  1. Claudia Sanhueza & Rodrigo Bravo & Oscar Giusti, 2008. "La Belleza y su Efecto en el Mercado Laboral: Evidencia para Chile," ILADES-Georgetown University Working Papers inv204, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.

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