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Off and running? Technology, trade and the rising demand for skilled workers in Latin America

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Author Info
Sanchez-Paramo, Carolina
Schady, Norbert

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Abstract

The authors describe the evolution of relative wages in five Latin American countries-Argentina, Brazil, Chile, Colombia, and Mexico. They use repeated cross-sections of household surveys, and decompose the evolution of relative wages into factors associated with changes in relative supply and relative demand. The authors have three main conclusions: 1) Increases in the relative wages of the most skilled (university-educated) workers took place concurrently with increases in their relative abundance in all of the countries except Brazil. This is strong evidence of increases in the demand for skilled workers. 2) Increases in the wage bill of skilled workers occurred largely within sectors, and in the same sectors in different countries, which is consistent with skill-biased technological change. 3) Trade appears to be an important transmission mechanism. Increases in the demand for the most skilled workers took place at a time when countries in Latin America considerably increased the penetration of imports, including imports of capital goods. The authors show that changes in the volume and research and development intensity of imports are significantly related to changes in the demand for more skilled workers in Latin America. Their research complements earlier work on the effects of technology transmitted through trade on productivity and on the demand for skilled labor.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3015.

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Date of creation: 30 Apr 2003
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Handle: RePEc:wbk:wbrwps:3015

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Keywords: Health Monitoring&Evaluation; Environmental Economics&Policies; Labor Policies; Economic Theory&Research; Public Health Promotion; Economic Theory&Research; Health Monitoring&Evaluation; Inequality; Curriculum&Instruction; Environmental Economics&Policies;

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  2. Daron Acemoglu & Fabrizio Zilibotti, 2001. "Productivity Differences," The Quarterly Journal of Economics, MIT Press, vol. 116(2), pages 563-606, May. [Downloadable!] (restricted)
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  3. Jere R. Behrman & Nancy Birdsall & Miguel Székely, 2003. "Economic Policy and Wage Differentials in Latin America," Working Papers 29, Center for Global Development. [Downloadable!]
  4. Stephen Machin & John Van Reenen, 1998. "Technology And Changes In Skill Structure: Evidence From Seven Oecd Countries," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1215-1244, November. [Downloadable!] (restricted)
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  5. Schultz, Theodore W, 1975. "The Value of the Ability to Deal with Disequilibria," Journal of Economic Literature, American Economic Association, vol. 13(3), pages 827-46, September. [Downloadable!] (restricted)
  6. Berman, Eli & Bound, John & Griliches, Zvi, 1994. "Changes in the Demand for Skilled Labor within U.S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, MIT Press, vol. 109(2), pages 367-97, May. [Downloadable!] (restricted)
  7. David Card & Thomas Lemieux, 2000. "Can Falling Supply Explain the Rising Return to College for Younger Men? A Cohort-Based Analysis," NBER Working Papers 7655, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. 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. [Downloadable!] (restricted)
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  9. Schiff, Maurice & Wang, Yanling & Olarreaga, Marcelo, 2002. "Trade-related technology diffusion and the dynamics of North-South and South-South integration," Policy Research Working Paper Series 2861, The World Bank. [Downloadable!]
  10. Gordon H. Hanson & Ann Harrison, 1999. "Trade liberalization and wage inequality in Mexico," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 52(2), pages 271-288, January.
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  12. Bell, Linda A, 1997. "The Impact of Minimum Wages in Mexico and Colombia," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages S102-35, July. [Downloadable!] (restricted)
  13. Feenstra, Robert C & Hanson, Gordon H, 1996. "Globalization, Outsourcing, and Wage Inequality," American Economic Review, American Economic Association, vol. 86(2), pages 240-45, May. [Downloadable!] (restricted)
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  14. Glewwe, Paul & Hall, Gillette, 1998. "Are some groups more vulnerable to macroeconomic shocks than others? Hypothesis tests based on panel data from Peru," Journal of Development Economics, Elsevier, vol. 56(1), pages 181-206, June. [Downloadable!] (restricted)
  15. Coe, David T & Helpman, Elhanan & Hoffmaister, Alexander W, 1997. "North-South R&D Spillovers," Economic Journal, Royal Economic Society, vol. 107(440), pages 134-49, January. [Downloadable!] (restricted)
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  16. Eli Berman & John Bound & Stephen Machin, 1998. "Implications Of Skill-Biased Technological Change: International Evidence," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1245-1279, November. [Downloadable!] (restricted)
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  17. David Card & John E. DiNardo, 2002. "Skill-Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles," Journal of Labor Economics, University of Chicago Press, vol. 20(4), pages 733-783, October. [Downloadable!]
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  18. Pavcnik, Nina, 2002. "Trade Liberalization, Exit, and Productivity Improvement: Evidence from Chilean Plants," Review of Economic Studies, Blackwell Publishing, vol. 69(1), pages 245-76, January.
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  19. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June. [Downloadable!] (restricted)
  20. Berman, Eli & Machin, Stephen, 2000. "Skill-Based Technology Transfer around the World," Oxford Review of Economic Policy, Oxford University Press, vol. 16(3), pages 12-22, Autumn.
  21. Orazio Attanasio & Pinelopi Goldberg & Nina Pavcnik, 2003. "Trade Reforms and Wage Inequiality in Colombia," NBER Working Papers 9830, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  22. Keller, Wolfgang, 2002. " Trade and the Transmission of Technology," Journal of Economic Growth, Springer, vol. 7(1), pages 5-24, March. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Giovagnoli, Paula Ines & Fiszbein, Ariel & Patrinos, Harry Anthony, 2005. "Estimating the returns to education in Argentina : 1992-2002," Policy Research Working Paper Series 3715, The World Bank. [Downloadable!]
  2. Murakami, Yuki & Blom, Andreas, 2008. "Accessibility and affordability of tertiary education in Brazil, Colombia, Mexico and Peru within a global context," Policy Research Working Paper Series 4517, The World Bank. [Downloadable!]
  3. Saccone Donatella, 2008. "Economic openness, skill demand and skill supply in three archetypes of developing countries: A theoretical and empirical investigation," Department of Economics Working Papers 200813, University of Turin. [Downloadable!]
  4. Canton, Erik & Blom, Andreas, 2004. "Can student loans improve accessibility to higher education and student performance? An impact study of the case of SOFES, Mexico," Policy Research Working Paper Series 3425, The World Bank. [Downloadable!]
  5. Maria Bas, 2008. "Trade, Technology Adoption and Wage Inequalities: Theory and Evidence," CEP Discussion Papers dp0902, Centre for Economic Performance, LSE. [Downloadable!]
  6. Pinelopi Koujianou Goldberg & Nina Pavcnik, 2007. "Distributional Effects of Globalization in Developing Countries," NBER Working Papers 12885, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  7. Francisco Gallego, 2006. "Skill Premium in Chile: Studying the Skill Bias Technical Change Hypothesis in the South," Working Papers Central Bank of Chile 363, Central Bank of Chile. [Downloadable!]
  8. Berman, Eli & Somanathan, Rohini & Tan, Hong W., 2005. "Is skill-biased technological change here yet ? Evidence from Indian manufacturing in the 1990," Policy Research Working Paper Series 3761, The World Bank. [Downloadable!]
  9. Leonardo Gasparini & Matías Horenstein & Sergio Olivieri, 2006. "Economic Polarisation in Latin America and the Caribbean: What do Household Surveys Tell Us?," Working Papers 0038, CEDLAS, Universidad Nacional de La Plata. [Downloadable!]
  10. Sohnesen, Thomas Pave & Blom, Andreas, 2005. "Is formal lifelong learning a profitable investment for all of life ? How age, education level, and flexibility of provision affect rates of return to adult education in Colombia," Policy Research Working Paper Series 3800, The World Bank. [Downloadable!]
  11. Pinelopi K. Goldberg & Nina Pavcnik, 2004. "Trade, Inequality, and Poverty: What Do We Know? Evidence from Recent Trade Liberalization Episodes in Developing Countries," NBER Working Papers 10593, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  12. Leonardo Gasparini, 2003. "Argentina´s Distributional Failure: The role of Integration and Public Policies," Working Papers 0001, CEDLAS, Universidad Nacional de La Plata. [Downloadable!]
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