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Efforts and inequality of opportunity in the Bolivian labor market

Author

Listed:
  • Cristian Ricardo Nogales Carvajal

    (Centro de Investigaciones Económicas y Empresariales, Universidad Privada Boliviana)

  • Fátima Rico Encinas

    (Centro de Investigaciones Económicas y Empresariales, Universidad Privada Boliviana)

Abstract

The equitable distribution of income and the level of human development are key differentiating characteristics of developed and developing countries. In this paper, efforts and other variables related to circumstances of individuals are quantified and simultaneously analyzed alongside traditional determinants of income in order to provide novel explanations of inequality among workers in Bolivia. Our contribution is the estimation and analysis of traditional Mincer equations combined with John Roemer’s Inequality of Opportunity approach. We find that efforts are important determinants of wage inequality in the country as well as regional development and informality. Thus we separate the portion of wage inequality that may be attributed to situations that are beyond the control of individuals and can be attributed to willingly taken decisions. Microsimulations show that it is possible to reduce inequality up to 21 percentage points if people are given chances to make similar efforts to improve their labor outcomes.

Suggested Citation

  • Cristian Ricardo Nogales Carvajal & Fátima Rico Encinas, 2015. "Efforts and inequality of opportunity in the Bolivian labor market," Investigación & Desarrollo, Universidad Privada Boliviana, vol. 2(1), pages 5-14.
    • Handle: RePEc:iad:wpaper:0115
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    References listed on IDEAS

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    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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