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Economic Policy and Wage Differentials in Latin America

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  • Jere R. Behrman

    ()

  • Nancy Birdsall
  • Miguel Székely

Abstract

This paper applies a new approach to the estimation of the impact of policy, both the levels and the changes, on wage differentials using a new high-quality data set on wage differentials by schooling level for 18 Latin American countries for the period 1977-1998. 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. On the other hand, privatization contributed to narrowing wage differentials and 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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Bibliographic Info

Paper provided by Center for Global Development in its series Working Papers with number 29.

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Length: 69 pages
Date of creation: Jul 2003
Date of revision:
Handle: RePEc:cgd:wpaper:29

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Related research

Keywords: Latin America; wages; market reform; tax reform; technological change;

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