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Accounting for Changing Earnings Inequality in Costa Rica, 1980-99

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  • TH Gindling
  • Juan Diego Trejos

Abstract

After declining from the mid-1970s to the mid-1980s, inequality in monthly earnings in Costa Rica stabilised from 1987 to 1992 and then increased from 1992 to 1999. In this article, we use recently developed techniques to measure the extent to which these changes in earnings inequality were the result of changes associated with the distributions of personal and workplace characteristics of workers or the earnings differences associated with those characteristics. We present evidence that the most important cause of the fall in inequality prior to 1987 was a decline in returns to education. Inequality stopped falling in Costa Rica in the 1990s in part because returns to education stopped falling. The most important cause of rising inequality in monthly earnings in the 1990s was an increase in the proportion of workers working a non-standard work week (part-time or over-time).

Suggested Citation

  • TH Gindling & Juan Diego Trejos, 2005. "Accounting for Changing Earnings Inequality in Costa Rica, 1980-99," Journal of Development Studies, Taylor & Francis Journals, vol. 41(5), pages 898-926.
  • Handle: RePEc:taf:jdevst:v:41:y:2005:i:5:p:898-926 DOI: 10.1080/00220380500145321
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    References listed on IDEAS

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    1. T. H. Gindling & Katherine Terrell, 2004. "Minimum Wages, Inequality and Globalization," William Davidson Institute Working Papers Series 2004-700, William Davidson Institute at the University of Michigan.
    2. Eli Berman & John Bound & Zvi Griliches, 1994. "Changes in the Demand for Skilled Labor within U. S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 367-397.
    3. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier.
    4. Robinson, Sherman, 1976. "A Note on the U Hypothesis Relating Income Inequality and Economic Development," American Economic Review, American Economic Association, vol. 66(3), pages 437-440, June.
    5. 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 410-442, June.
    6. David H. Autor & Lawrence F. Katz & Alan B. Krueger, 1998. "Computing Inequality: Have Computers Changed the Labor Market?," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1169-1213.
    7. Trejos S., Juan Diego, 2000. "Cambios distributivos durante las reformas económicas en Costa Rica," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 31823, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    8. Funkhouser, Edward, 1998. "Changes in the returns to education in Costa Rica," Journal of Development Economics, Elsevier, vol. 57(2), pages 289-317.
    9. Horton, Susan & Kanbur, Ravi & Mazumdar, Dipak, 1991. "Labor markets in an era of adjustment : an overview," Policy Research Working Paper Series 694, The World Bank.
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    Cited by:

    1. Moreno ROMA & Paul HIEBERT, "undated". "Relative House Price Dynamics Across Euro Area and US Cities: Convergence or Divergence?," EcoMod2010 259600143, EcoMod.
    2. Alejos, Luis Alejandro, 2003. "Contribution of the determinants of income inequality in Guatemala," MPRA Paper 42757, University Library of Munich, Germany.
    3. Hugo ROJAS-ROMAGOSA & Luis RIVERA, "undated". "Human Capital Formation and the Linkage between Trade and Poverty: The Cases of Costa Rica and Nicaragua," EcoMod2010 259600142, EcoMod.
    4. Kang, Byung-Goo & Yun, Myeong-Su, 2008. "Changes in Korean Wage Inequality, 1980−2005," IZA Discussion Papers 3780, Institute for the Study of Labor (IZA).
    5. Gindling, T.H., 2009. "South-South Migration: The Impact of Nicaraguan Immigrants on Earnings, Inequality and Poverty in Costa Rica," World Development, Elsevier, vol. 37(1), pages 116-126, January.
    6. Ayal Kimhi, 2004. "Growth, Inequality and Labor Markets in LDCs: A Survey," CESifo Working Paper Series 1281, CESifo Group Munich.
    7. Chris SAKELLARIOU, 2009. "Changing Wage Distributions and the Evolution of Wage Inequality in Indonesia:1994 – 2007," Economic Growth Centre Working Paper Series 0906, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.

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