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

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.

Bibliographic Details

Main Authors:	Gasparini, Leonardo, Galiani, Sebastian, Cruces, Guillermo, Acosta, Pablo
Language:	English
Published:	2011-12-01
Subjects:	ADVANCED COUNTRIES, AGE GROUPS, AGGREGATE INCOME, AGGREGATE UNEMPLOYMENT, AGGREGATE UNEMPLOYMENT RATE, AGRICULTURE, ANNUAL % CHANGE, AVERAGE RATE, AVERAGE WAGE, BASE YEAR, BUSINESS CYCLE, CAPITAL ACCUMULATION, COLLECTIVE BARGAINING, COLLEGE EDUCATION, COLLEGE GRADUATES, COMPARATIVE ADVANTAGE, CONSTANT ELASTICITY, COUNTRY EFFECTS, COUNTRY EXPERIENCES, COUNTRY LEVEL, COUNTRY REGRESSIONS, COUNTRY-SPECIFIC TRENDS, CRISES, DATA SET, DEMAND CURVE, DEMAND-SIDE, DEPENDENT VARIABLE, DEVELOPED COUNTRIES, DEVELOPED ECONOMIES, DEVELOPING COUNTRIES, DEVELOPMENT ECONOMICS, DEVELOPMENT POLICY, DISTRIBUTIONAL CHANGES, DISTRIBUTIONAL EFFECTS, ECONOMIC DEVELOPMENT, ECONOMIC GROWTH, ECONOMIC REVIEW, ECONOMIC SECTORS, ECONOMIC STRUCTURES, ECONOMIC STUDIES, ECONOMICS, EDUCATED WORKFORCE, EDUCATION SECTOR, EDUCATIONAL ATTAINMENT, EDUCATIONAL INSTITUTIONS, EDUCATIONAL LEVEL, EDUCATIONAL QUALITY, ELASTICITY, ELASTICITY OF SUBSTITUTION, EMPLOYMENT, EMPLOYMENT EFFECTS, EMPLOYMENT PATTERNS, EQUALIZING IMPACT, EXOGENOUS CHANGES, EXOGENOUS FACTORS, EXPLANATORY POWER, EXPORTS, EXTERNAL SHOCKS, FACTOR DEMAND, FACTOR ENDOWMENTS, FINANCIAL SECTOR, FISCAL POLICY, FUTURE RESEARCH, GDP, GDP PER CAPITA, GINI COEFFICIENT, HIGH SCHOOL DROPOUTS, HIGH SCHOOL GRADUATES, HIGH-SCHOOL DROPOUTS, HOUSEHOLD INCOME, HOUSEHOLD SURVEY, HUMAN CAPITAL, HUMAN DEVELOPMENT, INCOME DISTRIBUTION, INCOME DISTRIBUTIONS, INCOME INEQUALITY, INCOME REDISTRIBUTION, INCOME SOURCE, INCREASING INEQUALITY, INCREASING RATE, INSURANCE, INTERNATIONAL TRADE, LABOR DEMAND, LABOR FORCE, LABOR MARKET, LABOR MARKET CONDITIONS, LABOR MARKET INSTITUTIONS, LABOR MARKET POLICY, LABOR MARKET REFORM, LABOR MARKETS, LABOR POLICY, LABOR PRODUCTIVITY, LABOR REGULATIONS, LABOR RELATIONS, LABOR SUPPLIES, LABOR SUPPLY, LEARNING, LEVELS OF EDUCATION, LIQUIDITY, LITERATURE, LONG-TERM GROWTH, MANUFACTURING INDUSTRIES, MARGINAL PRODUCT, MARKET EQUILIBRIUM, MEAN VALUE, MINIMUM WAGE, MINIMUM WAGES, MOTIVATION, NATURAL RESOURCES, NEGATIVE RELATIONSHIP, OBSERVED CHANGE, OBSERVED CHANGES, OBSERVED EVOLUTION, OBSERVED INCREASE, OPEN ACCESS, PAPERS, PER CAPITA INCOME, PERFECT COMPETITION, POLICY CHANGES, POLICY DISCUSSIONS, POLICY INTERVENTIONS, POLICY RESEARCH, POSITIVE CORRELATION, POSITIVE RELATIONSHIP, POSTGRADUATE EDUCATION, POVERTY REDUCTION, PRESENT EVIDENCE, PREVIOUS SECTION, PRIMARY EDUCATION, PRIMARY SCHOOL, PRIMARY SCHOOL ENROLMENT, PRIME AGE, PRIVATE TRANSFERS, PRODUCTION FUNCTION, PRODUCTIVE ASSETS, PUBLIC POLICIES, REAL EXCHANGE RATE, REDISTRIBUTIVE POLICIES, REGIONAL LEVEL, REGRESSION ANALYSIS, RELATIVE DEMAND, RELATIVE IMPORTANCE, RELATIVE LABOR, RELATIVE LABOR DEMAND, RELATIVE PRICES, RELATIVE SUPPLY, RELATIVE WAGES, RESEARCH AGENDA, RISING DEMAND, RISING WAGE INEQUALITY, SALARIED WORKERS, SECONDARY EDUCATION, SECONDARY SCHOOL GRADUATES, SECONDARY SCHOOLING, SECTOR EMPLOYMENT, SERIAL CORRELATION, SERVICE SECTORS, SIGNIFICANT CORRELATION, SIGNIFICANT EFFECT, SIGNIFICANT RELATIONSHIP, SKILL GROUP, SKILL GROUPS, SKILL LEVEL, SKILL LEVELS, SKILL PREMIUM, SKILL PREMIUMS, SKILL UPGRADING, SKILL WORKERS, SKILLED EMPLOYMENT, SKILLED WAGE, SKILLED WAGE PREMIUM, SKILLED WORKERS, STATE-OWNED ENTERPRISES, TECHNICAL SKILLS, TERTIARY EDUCATION, TOTAL EMPLOYMENT, TOTAL FACTOR PRODUCTIVITY, TOTAL OUTPUT, TRADE LIBERALIZATION, TRADE REFORMS, UNEMPLOYMENT, UNEMPLOYMENT LEVEL, UNEMPLOYMENT RATE, UNEMPLOYMENT RATES, UNSKILLED LABOR, UNSKILLED WORKERS, WAGE DIFFERENTIAL, WAGE DIFFERENTIALS, WAGE GAP, WAGE INEQUALITY, WAGE LEVEL, WAGE LEVELS, WAGE PREMIUM, WAGE PREMIUMS, WEALTH, WORKER, WORKERS,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20120103093606 https://hdl.handle.net/10986/3696
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