Economic Growth and Wage Stagnation in Peru: 1998-2012
AbstractIn the last two decades, the Peruvian economy exhibited rapid growth. Moreover, the composition of the labor force improved in terms of education and experience, two variables which are typically associated to higher human capital. The average worker in 2012 had a higher level of education and was one and a half years older than in 1998, reflecting the impact of the demographic transition. However, the average real wage was roughly constant. We show that a decline in the wage premium for education, and to a minor extent for experience, is responsible for the lack of growth in the average real wage. Had these two premia remained constant throughout the period of analysis, average labor earnings would have increased by about 2.6 percent per year, of which 0.7 percentage points are accounted for the changes in the composition of the labor force in terms of age and education. We explore the role of the relative supply of workers with different levels of human capital as an explanation for the decline in the wage premium for education. Finally, we analyze the implications of these findings for some macroeconomic variables, as earnings and wage inequality, the labor share and total factor productivity.
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Bibliographic InfoPaper provided by Peruvian Economic Association in its series Working Papers with number 2014-5.
Date of creation: Feb 2014
Date of revision:
Other versions of this item:
- Peter Paz & Carlos Urrutia, 2014. "Economic Growth and Wage Stagnation in Perú: 1998-2012," Documentos de Trabajo 2014-372, Departamento de Economía - Pontificia Universidad Católica del Perú.
- I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-03-08 (All new papers)
- NEP-LAB-2014-03-08 (Labour Economics)
- NEP-LAM-2014-03-08 (Central & South America)
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