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A decomposition method to evaluate the ‘paradox of progress’ with evidence for Argentina

Author

Listed:
  • Javier Alejo

    (IECON-Universidad de la Rep´ublica)

  • Leonardo Gasparini

    (CEDLAS-IIE-FCE-UNLP & CONICET)

  • Gabriel Montes-Rojas

    (UBA & CONICET)

  • Walter Sosa-Escudero

    (UdeSA & CONICET)

Abstract

The ‘paradox of progress’ is an empirical regularity that associates more education with larger income inequality. Two driving and competing factors behind this phenomenon are the convexity of the ‘Mincer equation’ (that links wages and education) and the heterogeneity in its returns, as captured by quantile regressions. We propose a joint least-squares and quantile regression statistical framework to derive a decomposition in order to evaluate the relative contribution of each explanation. The estimators are based on the ‘functional derivative’ approach. We apply the proposed decomposition strategy to the case of Argentina 1992 to 2015.

Suggested Citation

  • Javier Alejo & Leonardo Gasparini & Gabriel Montes-Rojas & Walter Sosa-Escudero, 2022. "A decomposition method to evaluate the ‘paradox of progress’ with evidence for Argentina," CEDLAS, Working Papers 0293, CEDLAS, Universidad Nacional de La Plata.
    • Handle: RePEc:dls:wpaper:0293
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    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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