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

57 Pages Posted: 1 May 2017

See all articles by Manuel Fernández Sierra

Manuel Fernández Sierra

Universidad de Los Andes; IZA

Julian Messina

Inter-American Development Bank (IDB) - Research Department

Abstract

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.

Keywords: earnings inequality, unconditional quantile regressions, supply-demand framework, human capital

JEL Classification: E24, J20, J31

Suggested Citation

Fernández Sierra, Manuel and Messina, Julian, Skill Premium, Labor Supply and Changes in the Structure of Wages in Latin America. IZA Discussion Paper No. 10718, Available at SSRN: https://ssrn.com/abstract=2960527

Manuel Fernández Sierra (Contact Author)

Universidad de Los Andes ( email )

Carrera 1a No. 18A-10
Santafe de Bogota, AA4976
Colombia
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HOME PAGE: http://https://sites.google.com/view/manuelfernandezsierra

IZA ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Julian Messina

Inter-American Development Bank (IDB) - Research Department ( email )

1300 New York Ave., NW
Washington, DC 20577
United States

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