Education and the labour market in Latin America: why measurement is important and what it tells us about policies, reforms and performance

This paper examines two pivotal education and labour market policy and performance questions. One, the degree to which countries in the Latin American region are catching up or falling behind their competitors in the area of human capital formation with particular reference to upper secondary and technical education. Two, the degree to which higher educational attainment in Latin American countries results in positive labour market outcomes including labour force participation, employment and unemployment, and earnings. In this examination it assesses the degree to which the available data are sufficiently comparable, reliable and relevant to provide meaningful measurements to answer these questions. Part of this assessment is a review of the state of the art in the collection and analysis of related education and labour market data and indicators paying particular attention to the growing importance of measuring human capital and skills in the workplace more meaningfully. It points out major information limitations but despite these it concludes that the data are sufficient to provide these measurements once they have been standardized into internationally recognized comparable education and labour market indicators. However, important gaps persist in education, training and labour statistics, which handicap the in-depth study of the relationship between work and education and training. In its study of educational attainment and performance in the region it finds that Latin American countries are falling behind their competitors in the key educational areas of upper secondary and technical education and stresses the importance of reforms of the upper secondary and technical education system and the associated areas of tertiary education to remedy the growing global disparities. It analyzes for selected Latin American countries the relation between educational attainment and labour force participation, employment and unemployment and earnings. In its analysis of returns to education it presents recent trends in education premiums by age and level together with an analysis of gender wage disparities within the same levels of education. It finds that the pattern of positive labour market returns to education in the form of higher wages and lower unemployment which is fairly consistent throughout OECD countries is much more mixed in the Latin American countries and that in a number of cases it is negative. In particular, it finds that gender wage disparities among young workers with the same educational attainment have almost all increased in recent years although they are still lower than those found in the total working population.