Changes in Returns to Education in Latin America: the Role of Demand and Supply of Skills
AbstractChanges in the relative wages of workers with different amounts of education have profound implications for developing countries, where initial levels of inequality are often very high. In this paper we use micro data for five Latin American countries over the 1980s and 1990s to document trends in men's returns to education, and to estimate whether the changes in skill premia we observe can be explained by supply or demand factors. We propose a model of demand for skills with three production inputs, and we allow the elasticity of substitution between the different educational inputs to be different using a nested CES function. Using this model, we show that the dramatic expansion in secondary school in many countries in Latin America depressed the wages of workers with secondary school. We also show that there have been sharp increases in the demand for more skilled workers in the region.
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Bibliographic InfoPaper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0712.
Date of creation: Dec 2005
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returns to education; demand and supply of skills;
Other versions of this item:
- Marco Manacorda & Carolina Sánchez-Páramo & Norbert Schady, 2010. "Changes in Returns to Education in Latin America: The Role of Demand and Supply of Skills," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 63(2), pages 307-326, January.
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-08-19 (All new papers)
- NEP-EDU-2006-08-19 (Education)
- NEP-HRM-2006-08-19 (Human Capital & Human Resource Management)
- NEP-LAB-2006-08-19 (Labour Economics)
- NEP-LTV-2006-08-19 (Unemployment, Inequality & Poverty)
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