Wage Inequality in Developing Countries: Market Forces or Government Intervention

Univ. of Uruguay Economics Working Paper No. 13/1999

41 Pages Posted: 30 Aug 2001

See all articles by Maximo Rossi

Maximo Rossi

Departamento de Economía, dECON; Universidad de la Republica - Department of Economics

Daniel Miles

University of Vigo - Faculty of Economics and Business

Date Written: August 9, 2001

Abstract

Wage dispersion had increased significantly in developing countries, despite the openness to trade of these economies. Research on this issue, using approaches valid under the assumption of conventional demand-supply competitive framework, conclude that this observed increase in wage inequality is a consequence of an increase in skills premium. In this paper we show that this conclusion could be bias if government intervention is not taken into account. Here we find that in Uruguay most of the increase in wage dispersion could be explain by a significant increase in public wages and a decrease of minimum wage. In addition, we observe that the impact of these intervetions are different depending on the degree of concentration of population and economic activity.

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Keywords: wage dispersion, returns to schooling, quantile regression

JEL Classification: J3, J31, J38

Suggested Citation

Rossi, Maximo and Miles, Daniel, Wage Inequality in Developing Countries: Market Forces or Government Intervention (August 9, 2001). Univ. of Uruguay Economics Working Paper No. 13/1999, Available at SSRN: https://ssrn.com/abstract=281208 or http://dx.doi.org/10.2139/ssrn.281208

Maximo Rossi (Contact Author)

Departamento de Economía, dECON ( email )

Facultad de Ciencias Sociales
Jose E. Rodo 1854
Montevideo 11200, 11200
Uruguay
59824106449 (Phone)
59824106450 (Fax)

HOME PAGE: http://Http://www.decon.edu.uy/~mito

Universidad de la Republica - Department of Economics ( email )

Constituyente 1502 Piso 6º
Montevideo, 11200
Uruguay
+598 2 4106449 (Phone)
+598 2 4106450 (Fax)

HOME PAGE: http://decon.edu.uy/~mito/pagina

Daniel Miles

University of Vigo - Faculty of Economics and Business ( email )

As Lagoas Marcosende s/n
36200 Vigo
Spain

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