Skill Premium, Labor Supply and Changes in the Structure of Wages in Latin America
Earnings inequality declined rapidly in Argentina, Brazil and Chile during the 2000s. A reduction in the experience premium is a fundamental driver of declines in upper-tail (90/50) inequality, while a decline in the education premium is the primary determinant of the evolution of lower-tail (50/10) inequality. Relative labor supply is important for explaining changes in the skill premiums. Relative demand trends favored high-skilled workers during the 1990s, shifting in favor of low-skilled workers during the 2000s. Changes in the minimum wage, and more importantly, commodity-led terms of trade improvements are key factors behind these relative skill demand trends.
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| Format: | Working Papers biblioteca |
| Language: | English |
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Inter-American Development Bank
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| Subjects: | Income Equality, Labor Productivity, Labor Force, Unemployment Rate, Human Capital, Female Labor Force, J20 - Demand and Supply of Labor: General, J31 - Wage Level and Structure • Wage Differentials, Unemployment;labor supply;Wage Gap;Minimun wage, |
| Online Access: | http://dx.doi.org/10.18235/0011788 https://publications.iadb.org/en/skill-premium-labor-supply-and-changes-structure-wages-latin-america |
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| Summary: | Earnings inequality declined rapidly in Argentina, Brazil and Chile during the 2000s. A reduction in the experience premium is a fundamental driver of declines in upper-tail (90/50) inequality, while a decline in the education premium is the primary determinant of the evolution of lower-tail (50/10) inequality. Relative labor supply is important for explaining changes in the skill premiums. Relative demand trends favored high-skilled workers during the 1990s, shifting in favor of low-skilled workers during the 2000s. Changes in the minimum wage, and more importantly, commodity-led terms of trade improvements are key factors behind these relative skill demand trends. |
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