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Two Stories of Wage Dynamics in Latin America: Different Policies, Different Outcomes

Author

Listed:
  • Gustavo Canavire-Bacarreza

    (Universidad EAFIT)

  • Luis C. Carvajal-Osorio

    (Universidad EAFIT
    Vanderbilt University)

Abstract

This article explores the variation in the wage distributions of two Latin American countries, Bolivia and Colombia, which have had different political and economic strategies in recent years. Using data from household surveys, a decomposition of the wage distribution in each country using functional principal component analysis is conducted. The results suggest that Bolivia, which has implemented state-centered policies, has experienced a general increase in wages, especially benefiting the least skilled workers and the informal sector. On the other hand, the wage distribution in Colombia, whose economic policy has leaned towards market-oriented principles, has become more concentrated around the median wage, mainly due to changes in formal sector wages.

Suggested Citation

  • Gustavo Canavire-Bacarreza & Luis C. Carvajal-Osorio, 2020. "Two Stories of Wage Dynamics in Latin America: Different Policies, Different Outcomes," Journal of Labor Research, Springer, vol. 41(1), pages 128-168, June.
  • Handle: RePEc:spr:jlabre:v:41:y:2020:i:1:d:10.1007_s12122-019-09296-x
    DOI: 10.1007/s12122-019-09296-x
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    More about this item

    Keywords

    Wage dynamics; Functional principal component analysis; Wage distributions; Wage inequality;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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