Economic Policy and Wage Differentials in Latin America

70 Pages Posted: 9 Jan 2002 Last revised: 15 Feb 2012

See all articles by Jere Behrman

Jere Behrman

University of Pennsylvania - Department of Economics

Nancy Birdsall

Center for Global Development

Miguel Szekely

Independent

Date Written: April 1, 2003

Abstract

This paper applies a new approach to the estimation of the impact of policy, both the levels and the changes, on wage differentials using a new high-quality data set on wage differentials by schooling level for 18 Latin American countries for the period 1977-1998. The results indicate that liberalizing policy changes overall have had a short-run disequalizing effect of expanding wage differentials, although this effect tends to fade away over time. This disequalizing effect is due to the strong impact of domestic financial market reform, capital account liberalization and tax reform. On the other hand, privatization contributed to narrowing wage differentials and trade openness had no significant effect on wage differentials. Technological progress, rather than trade flows, appears to be a channel through which policy changes are affecting inequality.

Keywords: Reform, Inequality, Wages, Trade, Distribution

JEL Classification: D31, J31

Suggested Citation

Behrman, Jere R. and Birdsall, Nancy and Szekely, Miguel, Economic Policy and Wage Differentials in Latin America (April 1, 2003). PIER Working Paper No. 01-048; Center for Global Development Working Paper No. 29. Available at SSRN: https://ssrn.com/abstract=294517 or http://dx.doi.org/10.2139/ssrn.294517

Jere R. Behrman (Contact Author)

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States
215-898-7704 (Phone)
215-573-2057 (Fax)

Nancy Birdsall

Center for Global Development ( email )

2055 L St. NW
5th floor
Washington, DC 20036
United States
202-416-0700 (Phone)

Miguel Szekely

Independent

No Address Available
United States

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