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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
  • Galiani, Sebastian
  • Cruces, Guillermo
  • Acosta, Pablo

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, 2011. "Educational upgrading and returns to skills in Latin America : evidence from a supply-demand framework, 1990-2010," Policy Research Working Paper Series 5921, The World Bank.
  • Handle: RePEc:wbk:wbrwps:5921
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    References listed on IDEAS

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    1. Marco Manacorda & Carolina Sanchez-Paramo & Norbert Schady, 2010. "Changes in Returns to Education in Latin America: The Role of Demand and Supply of Skills," ILR Review, Cornell University, ILR School, vol. 63(2), pages 307-326, January.
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    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

    Citations

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    Cited by:

    1. Cruz, Marcio & Milet, Emmanuel & Olarreaga, Marcelo, 2017. "Online Exports and the Wage Gap," CEPR Discussion Papers 12092, C.E.P.R. Discussion Papers.
    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. Cord, Louise & Barriga Cabanillas, Oscar & Lucchetti, Leonardo & Rodriguez-Castelan, Carlos & Sousa, Liliana D. & Valderrama, Daniel, 2014. "Inequality stagnation in Latin America in the aftermath of the global financial crisis," Policy Research Working Paper Series 7146, The World Bank.
    7. 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.
    8. Naude, Wim & Nagler, Paula, 2015. "Industrialisation, Innovation, Inclusion," MERIT Working Papers 043, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    9. repec:unu:wpaper:wp2012-10 is not listed on IDEAS
    10. Cruces, Guillermo & Gasparini, Leonardo, 2011. "Inequality in Education: Evidence for Latin America," WIDER Working Paper Series 093, World Institute for Development Economic Research (UNU-WIDER).
    11. 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.
    12. Marina Bassi & Matias Busso & Juan Sebastian Muñoz, 2015. "Enrollment, Graduation, and Dropout Rates in Latin America: Is the Glass Half Empty or Half Full?," ECONOMIA JOURNAL, THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION - LACEA, vol. 0(Fall 2015), pages 113-156, October.
    13. Luis Beccaria & Roxana Maurizio & Gustavo Vázquez, 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.

    More about this item

    Keywords

    Labor Markets; Labor Policies; Economic Theory&Research; Inequality; Tertiary Education;

    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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