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Educational Upgrading and Returns to Skills in Latin America: Evidence from a Supply-Demand Framework, 1990-2010

Author

Listed:
  • Gasparini, Leonardo

    () (CEDLAS-UNLP)

  • Galiani, Sebastian

    () (University of Maryland)

  • Cruces, Guillermo

    () (CEDLAS-UNLP)

  • Acosta, Pablo A.

    () (World Bank)

Abstract

It has been argued that a factor behind the decline in income inequality in Latin America in the 2000s was the educational upgrading of its labor force. Between 1990 and 2010, the proportion of the labor force in the region with at least secondary education increased from 40 to 60 percent. Concurrently, returns to secondary education completion fell throughout the past two decades, while the 2000s saw a reversal in the increase in the returns to tertiary education experienced in the 1990s. This paper studies the evolution of wage differentials and the trends in the supply of workers by educational level for 16 Latin American countries between 1990 and 2000. The analysis estimates the relative contribution of supply and demand factors behind recent trends in skill premia for tertiary and secondary educated workers. Supply-side factors seem to have limited explanatory power relative to demand-side factors, and are only relevant to explain part of the fall in wage premia for high-school graduates. Although there is significant heterogeneity in individual country experiences, on average the trend reversal in labor demand in the 2000s can be partially attributed to the recent boom in commodity prices that could favor the unskilled (non-tertiary educated) workforce, although employment patterns by sector suggest that other within-sector forces are also at play, such as technological diffusion or skill mismatches that may reduce the labor productivity of highly-educated workers.

Suggested Citation

  • Gasparini, Leonardo & Galiani, Sebastian & Cruces, Guillermo & Acosta, Pablo A., 2011. "Educational Upgrading and Returns to Skills in Latin America: Evidence from a Supply-Demand Framework, 1990-2010," IZA Discussion Papers 6244, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp6244
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Educational upgrading and returns to skills in Latin America : evidence from a supply-demand framework, 1990-2010
      by Maximo Rossi in Wikiprogress América Latina on 2012-01-06 02:12:00
    2. Educational upgrading and returns to skills in Latin America : evidence from a supply-demand framework, 1990-2010
      by max.rossi in Wikiprogress América Latina on 2012-01-06 02:12:00
    3. Educational Upgrading and Returns to Skills in Latin America: Evidence from a Supply-Demand Framework, 1990-2010
      by maximorossi in NEP-LTV blog on 2019-04-29 14:00:46
    4. Educational Upgrading and Returns to Skills in Latin America. Evidence from a Supply-Demand Framework, 1990-2010
      by Maximo Rossi in Wikiprogress América Latina on 2012-03-18 18:17:00
    5. Educational Upgrading and Returns to Skills in Latin America: Evidence from a Supply-Demand Framework, 1990-2010
      by maximorossi in NEP-LTV blog on 2012-01-20 21:12:23
    6. Educational Upgrading and Returns to Skills in Latin America: Evidence from a Supply-Demand Framework, 1990-2010
      by Maximo Rossi in Wikiprogress América Latina on 2012-01-20 21:14:00
    7. Educational Upgrading and Returns to Skills in Latin America: Evidence from a Supply-Demand Framework, 1990-2010
      by maximorossi in NEP-LTV blog on 2012-01-20 21:12:23

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    Cited by:

    1. Marcio Cruz & Emmanuel Milet & Marcelo Olarreaga, 2020. "Online exports and the skilled-unskilled wage gap," PLOS ONE, Public Library of Science, vol. 15(5), pages 1-24, May.
    2. Bentaouet Kattan,Raja & Székely,Miguel, 2015. "Analyzing the dynamics of school dropout in upper secondary education in Latin America : a cohort approach," Policy Research Working Paper Series 7223, The World Bank.
    3. Lustig, Nora & Lopez-Calva, Luis F. & Ortiz-Juarez, Eduardo, 2013. "Declining Inequality in Latin America in the 2000s: The Cases of Argentina, Brazil, and Mexico," World Development, Elsevier, vol. 44(C), pages 129-141.
    4. Carlos Rodriguez-Castelan & Luis F. Lopez-Calva & Nora Lustig & Daniel Valderrama, 2016. "Understanding the Dynamics of Labor Income Inequality in Latin America," Working Papers 1608, Tulane University, Department of Economics.
    5. Binelli Chiara, 2015. "How the wage-education profile got more convex: evidence from Mexico," The B.E. Journal of Macroeconomics, De Gruyter, vol. 15(2), pages 509-560, July.
    6. Fernández, Manuel & Messina, Julián, 2018. "Skill premium, labor supply, and changes in the structure of wages in Latin America," Journal of Development Economics, Elsevier, vol. 135(C), pages 555-573.
    7. Louise Cord & Oscar Barriga†Cabanillas & Leonardo Lucchetti & Carlos Rodríguez†Castelán & Liliana D. Sousa & Daniel Valderrama, 2017. "Inequality Stagnation in Latin America in the Aftermath of the Global Financial Crisis," Review of Development Economics, Wiley Blackwell, vol. 21(1), pages 157-181, February.
    8. Adriana D. Kugler, 2019. "Impacts of Labor Market Institutions and Demographic Factors on Labor Markets in Latin America," IMF Working Papers 2019/155, International Monetary Fund.
    9. Raymundo Campos & Gerardo Esquivel & Nora Lustig, 2012. "The Rise and Fall of Income Inequality in Mexico, 1989–2010," Working Papers 267, ECINEQ, Society for the Study of Economic Inequality.
    10. Naude, Wim & Nagler, Paula, 2015. "Industrialisation, Innovation, Inclusion," MERIT Working Papers 2015-043, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    11. Roxana Maurizio & Ana Paula Monsalvo, 2021. "Changes in occupations and their task content: Implications for employment and inequality in Argentina, 2003-19," WIDER Working Paper Series wp-2021-15, World Institute for Development Economic Research (UNU-WIDER).
    12. repec:unu:wpaper:wp2012-10 is not listed on IDEAS
    13. Yoshimichi Murakami & Tomokazu Nomura, 2021. "Impact of Changes in Values of Degrees on Wage Inequality: Evidence from Chile," Discussion Paper Series DP2021-09, Research Institute for Economics & Business Administration, Kobe University.
    14. Guillermo Cruces & Carolina García Domench & Leonardo Gasparini, 2011. "Inequality in Education: Evidence for Latin America," WIDER Working Paper Series wp-2011-093, World Institute for Development Economic Research (UNU-WIDER).
    15. Azevedo, Joao Pedro & Davalos, Maria Eugenia & Diaz-Bonilla, Carolina & Atuesta, Bernardo & Castaneda, Raul Andres, 2013. "Fifteen years of inequality in Latin America : how have labor markets helped ?," Policy Research Working Paper Series 6384, The World Bank.
    16. Leonardo Fabio Morales & Christian Posso & Luz A. Flórez, 2021. "Heterogeneity in the Returns to Tertiary Education for the Disadvantage Youth: Quality vs. Quantity Analysis," Borradores de Economia 1150, Banco de la Republica de Colombia.
    17. Marina Bassi & Matias Busso & Juan Sebastian Muñoz, 2015. "Enrollment, Graduation, and Dropout Rates in Latin America: Is the Glass Half Empty or Half Full?," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2015), pages 113-156, October.
    18. Luis Beccaria & Roxana Maurizio & Gustavo V�zquez, 2015. "Recent decline in wage inequality and formalization of the labour market in Argentina," International Review of Applied Economics, Taylor & Francis Journals, vol. 29(5), pages 677-700, September.

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    More about this item

    Keywords

    skill premia; supply and demand of labor; income inequality; Latin America;
    All these keywords.

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • D3 - Microeconomics - - Distribution
    • I2 - Health, Education, and Welfare - - Education
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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