Skill Premium, Labor Supply and Changes in the Structure of Wages in Latin America

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Author
Fernández, Manuel ;
Date issued
Mar 2017
Subject
Income Equality;
Labor Productivity;
Labor Force;
Unemployment Rate;
Human Capital;
Female Labor Force
JEL code
J20 - Demand and Supply of Labor: General;
J31 - Wage Level and Structure • Wage Differentials
Country
Chile;
Brazil;
Argentina
Category
Working Papers
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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