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Wage Inequality in Developing Countries: Market Forces or Government Intervention

Author

Listed:
  • Daniel Miles

    (Departamento de Economía Aplicada, Universidad de Vigo.)

  • Máximo Rossi

    (Departmento de Economía, Facultad de Ciencias Sociales, Universidad de la República)

Abstract

Wage dispersion had increased significantly in developing countries, despite the openness to trade of these economies. Research on this issue, using approaches valid under the assumption of conventional demand-supply competitive framework, conclude that this observed increase in wage inequality is a consequence of an increase in skills premium. In this paper we show that this conclusion could be bias if governement intervention is not taken into account. Here we find that in Uruguay most of the increase in wage dispersion could be explain by a significant increase in public wages and a decrease of minimum wage. In addition, we observe that the the impact of these intervetions are different depending on the degree of concentration of population and economic activity.

Suggested Citation

  • Daniel Miles & Máximo Rossi, 2001. "Wage Inequality in Developing Countries: Market Forces or Government Intervention," Documentos de Trabajo (working papers) 1001, Department of Economics - dECON.
    • Handle: RePEc:ude:wpaper:1001
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    File URL: https://hdl.handle.net/20.500.12008/1940
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    References listed on IDEAS

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    Cited by:

    1. Bucheli, Marisa & Furtado, Magdalena, 2005. "Uruguay 1998-2002: income distribution during the crisis," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    2. Meltem Ucal & Alfred Albert Haug & Mehmet Hüseyin Bilgin, 2016. "Income inequality and FDI: evidence with Turkish data," Applied Economics, Taylor & Francis Journals, vol. 48(11), pages 1030-1045, March.
    3. Marisa Carla Bucheli Anaya & Cecilia González Rodríguez-Villamil, 2012. "An estimation of the wage curve for Uruguay," Revista Cuadernos de Economia, Universidad Nacional de Colombia, FCE, CID, June.
    4. Ucal, Meltem & Bilgin, Mehmet Huseyin, 2009. "Income Inequality and FDI in Turkey: FM-OLS (Phillips-Hansen) Estimation and ARDL Approach to Cointegration," MPRA Paper 48765, University Library of Munich, Germany.

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