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Educational upgrading and returns to skills in Latin America : evidence from a supply-demand framework, 1990-2010

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  • Gasparini, Leonardo
  • Galiani, Sebastian
  • Cruces, Guillermo
  • Acosta, Pablo

Abstract

It has been argued that a factor behind the decline in income inequality in Latin America in the 2000s was the educational upgrading of its labor force. Between 1990 and 2010, the proportion of the labor force in the region with at least secondary education increased from 40 to 60 percent. Concurrently, returns to secondary education completion fell throughout the past two decades, while the 2000s saw a reversal in the increase in the returns to tertiary education experienced in the 1990s. This paper studies the evolution of wage differentials and the trends in the supply of workers by educational level for 16 Latin American countries between 1990 and 2000. The analysis estimates the relative contribution of supply and demand factors behind recent trends in skill premia for tertiary and secondary educated workers. Supply-side factors seem to have limited explanatory power relative to demand-side factors, and are only relevant to explain part of the fall in wage premia for high-school graduates. Although there is significant heterogeneity in individual country experiences, on average the trend reversal in labor demand in the 2000s can be partially attributed to the recent boom in commodity prices that could favor the unskilled (non-tertiary educated) workforce, although employment patterns by sector suggest that other within-sector forces are also at play, such as technological diffusion or skill mismatches that may reduce the labor productivity of highly-educated workers.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 5921.

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Date of creation: 01 Dec 2011
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Handle: RePEc:wbk:wbrwps:5921

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Keywords: Labor Markets; Labor Policies; Economic Theory&Research; Inequality; Tertiary Education;

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References

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  1. Joanne Lindley & Stephen Machin, 2011. "Rising Wage Inequality and Postgraduate Education," CEP Discussion Papers dp1075, Centre for Economic Performance, LSE.
  2. Daron Acemoglu & David Autor, 2010. "Skills, Tasks and Technologies: Implications for Employment and Earnings," NBER Working Papers 16082, National Bureau of Economic Research, Inc.
  3. Orazio Attanasio & Pinelopi Goldberg & Nina Pavcnik, 2003. "Trade Reforms and Wage Inequiality in Colombia," NBER Working Papers 9830, National Bureau of Economic Research, Inc.
  4. Sebastian Galiani & Pablo Sanguinetti, 2003. "The Impact of Trade Liberalization on Wage Inequality: Evidence from Argentina," Working Papers 65, Universidad de San Andres, Departamento de Economia, revised Oct 2003.
  5. Guillermo Cruces & Carolina García Domench & Leonardo Gasparini, 2012. "Inequality in Education: Evidence for Latin America," CEDLAS, Working Papers 0135, CEDLAS, Universidad Nacional de La Plata.
  6. Leonardo Gasparini & Guillermo Cruces & Leopoldo Tornarolli, 2009. "Recent trends in income inequality in Latin America," Working Papers 132, ECINEQ, Society for the Study of Economic Inequality.
  7. Marco Manacorda & Carolina Sanchez-Paramo & Norbert Schady, 2005. "Changes in Returns to Education in Latin America: the Role of Demand and Supply of Skills," CEP Discussion Papers dp0712, Centre for Economic Performance, LSE.
  8. Ann Harrison & Gordon Hanson, 1999. "Who Gains from Trade Reform? Some Remaining Puzzles," NBER Working Papers 6915, National Bureau of Economic Research, Inc.
  9. Robert J. Barro & Jong-Wha Lee, 2010. "A New Data Set of Educational Attainment in the World, 1950–2010," NBER Working Papers 15902, National Bureau of Economic Research, Inc.
  10. Atolia, Manoj, 2007. "Trade liberalization and rising wage inequality in Latin America: Reconciliation with HOS theory," Journal of International Economics, Elsevier, vol. 71(2), pages 467-494, April.
  11. Ferreira, Francisco H.G. & Leite, Phillippe G. & Wai-Poi, Matthew, 2007. "Trade Liberalization, Employment Flows and Wage Inequality in Brazil," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  12. Leonardo Gasparini & Nora Lustig, 2011. "The rise and fall of income inequality in Latin America," Working Papers 213, ECINEQ, Society for the Study of Economic Inequality.
  13. Gabriel Montes Rojas, 2006. "Skill premia in Mexico: demand and supply factors," Applied Economics Letters, Taylor & Francis Journals, vol. 13(14), pages 917-924.
  14. Leonardo Gasparini & Pablo Acosta, 2004. "Capital Accumulation, Trade Liberalization and Rising Wage Inequality: The Case of Argentina," CEDLAS, Working Papers 0005, CEDLAS, Universidad Nacional de La Plata.
  15. Brambilla, Irene & Carneiro, Rafael Dix & Lederman, Daniel & Porto, Guido, 2010. "Skills, exports, and the wages of five million Latin American workers," Policy Research Working Paper Series 5246, The World Bank.
  16. Gindling, T.H. & Terrell, Katherine, 2005. "The effect of minimum wages on actual wages in formal and informal sectors in Costa Rica," World Development, Elsevier, vol. 33(11), pages 1905-1921, November.
  17. Guillermo Cruces & Leonardo Gasparini, 2008. "A Distribution in Motion: The Case of Argentina," CEDLAS, Working Papers 0078, CEDLAS, Universidad Nacional de La Plata.
  18. Claudia Goldin & Lawrence F. Katz, 2007. "The Race between Education and Technology: The Evolution of U.S. Educational Wage Differentials, 1890 to 2005," NBER Working Papers 12984, National Bureau of Economic Research, Inc.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Educational Upgrading and Returns to Skills in Latin America. Evidence from a Supply-Demand Framework, 1990-2010
    by Maximo Rossi in Wikiprogress América Latina on 2012-03-18 13:17:00
  2. Educational upgrading and returns to skills in Latin America : evidence from a supply-demand framework, 1990-2010
    by Maximo Rossi in Wikiprogress América Latina on 2012-01-05 20:12:00
  3. Educational upgrading and returns to skills in Latin America : evidence from a supply-demand framework, 1990-2010
    by max.rossi in Wikiprogress América Latina on 2012-01-05 20:12:00
  4. Educational Upgrading and Returns to Skills in Latin America: Evidence from a Supply-Demand Framework, 1990-2010
    by maximorossi in NEP-LTV blog on 2012-01-20 15:12:23
  5. Educational Upgrading and Returns to Skills in Latin America: Evidence from a Supply-Demand Framework, 1990-2010
    by Maximo Rossi in Wikiprogress América Latina on 2012-01-20 15:14:00
  6. Educational Upgrading and Returns to Skills in Latin America: Evidence from a Supply-Demand Framework, 1990-2010
    by maximorossi in NEP-LTV blog on 2012-01-20 15:12:23
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Nora Lustig & Luis F. Lopez-Calva & Eduardo Ortiz-Juarez, 2012. "Declining Inequality in Latin America in the 2000s: the Cases of Argentina, Brazil, and Mexico," Working Papers 266, ECINEQ, Society for the Study of Economic Inequality.
  2. Raymundo M. Campos-Vazquez & Gerardo Esquivel & Nora Lustig, 2012. "The Rise and Fall of Income Inequality in Mexico: 1989-2010," Serie documentos de trabajo del Centro de Estudios Económicos 2012-04, El Colegio de México, Centro de Estudios Económicos.
  3. Guillermo Cruces & Carolina García Domench & Leonardo Gasparini, 2012. "Inequality in Education: Evidence for Latin America," CEDLAS, Working Papers 0135, CEDLAS, Universidad Nacional de La Plata.
  4. Azevedo, Joao Pedro & Davalos, Maria Eugenia & Diaz-Bonilla, Carolina & Atuesta, Bernardo & Castaneda, Raul Andres, 2013. "Fifteen years of inequality in Latin America : how have labor markets helped ?," Policy Research Working Paper Series 6384, The World Bank.
  5. Binelli, Chiara, 2014. "How the wage-education profile got more convex: evidence from Mexico," Discussion Paper Series In Economics And Econometrics 1404, Economics Division, School of Social Sciences, University of Southampton.

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