Gasparini, LeonardoGaliani, SebastianCruces, GuillermoAcosta, Pablo2012-03-192012-03-192011-12-01https://hdl.handle.net/10986/3696It 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.CC BY 3.0 IGOADVANCED COUNTRIESAGE GROUPSAGGREGATE INCOMEAGGREGATE UNEMPLOYMENTAGGREGATE UNEMPLOYMENT RATEAGRICULTUREANNUAL % CHANGEAVERAGE RATEAVERAGE WAGEBASE YEARBUSINESS CYCLECAPITAL ACCUMULATIONCOLLECTIVE BARGAININGCOLLEGE EDUCATIONCOLLEGE GRADUATESCOMPARATIVE ADVANTAGECONSTANT ELASTICITYCOUNTRY EFFECTSCOUNTRY EXPERIENCESCOUNTRY LEVELCOUNTRY REGRESSIONSCOUNTRY-SPECIFIC TRENDSCRISESDATA SETDEMAND CURVEDEMAND-SIDEDEPENDENT VARIABLEDEVELOPED COUNTRIESDEVELOPED ECONOMIESDEVELOPING COUNTRIESDEVELOPMENT ECONOMICSDEVELOPMENT POLICYDISTRIBUTIONAL CHANGESDISTRIBUTIONAL EFFECTSECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIC REVIEWECONOMIC SECTORSECONOMIC STRUCTURESECONOMIC STUDIESECONOMICSEDUCATED WORKFORCEEDUCATION SECTOREDUCATIONAL ATTAINMENTEDUCATIONAL INSTITUTIONSEDUCATIONAL LEVELEDUCATIONAL QUALITYELASTICITYELASTICITY OF SUBSTITUTIONEMPLOYMENTEMPLOYMENT EFFECTSEMPLOYMENT PATTERNSEQUALIZING IMPACTEXOGENOUS CHANGESEXOGENOUS FACTORSEXPLANATORY POWEREXPORTSEXTERNAL SHOCKSFACTOR DEMANDFACTOR ENDOWMENTSFINANCIAL SECTORFISCAL POLICYFUTURE RESEARCHGDPGDP PER CAPITAGINI COEFFICIENTHIGH SCHOOL DROPOUTSHIGH SCHOOL GRADUATESHIGH-SCHOOL DROPOUTSHOUSEHOLD INCOMEHOUSEHOLD SURVEYHUMAN CAPITALHUMAN DEVELOPMENTINCOME DISTRIBUTIONINCOME DISTRIBUTIONSINCOME INEQUALITYINCOME REDISTRIBUTIONINCOME SOURCEINCREASING INEQUALITYINCREASING RATEINSURANCEINTERNATIONAL TRADELABOR DEMANDLABOR FORCELABOR MARKETLABOR MARKET CONDITIONSLABOR MARKET INSTITUTIONSLABOR MARKET POLICYLABOR MARKET REFORMLABOR MARKETSLABOR POLICYLABOR PRODUCTIVITYLABOR REGULATIONSLABOR RELATIONSLABOR SUPPLIESLABOR SUPPLYLEARNINGLEVELS OF EDUCATIONLIQUIDITYLITERATURELONG-TERM GROWTHMANUFACTURING INDUSTRIESMARGINAL PRODUCTMARKET EQUILIBRIUMMEAN VALUEMINIMUM WAGEMINIMUM WAGESMOTIVATIONNATURAL RESOURCESNEGATIVE RELATIONSHIPOBSERVED CHANGEOBSERVED CHANGESOBSERVED EVOLUTIONOBSERVED INCREASEOPEN ACCESSPAPERSPER CAPITA INCOMEPERFECT COMPETITIONPOLICY CHANGESPOLICY DISCUSSIONSPOLICY INTERVENTIONSPOLICY RESEARCHPOSITIVE CORRELATIONPOSITIVE RELATIONSHIPPOSTGRADUATE EDUCATIONPOVERTY REDUCTIONPRESENT EVIDENCEPREVIOUS SECTIONPRIMARY EDUCATIONPRIMARY SCHOOLPRIMARY SCHOOL ENROLMENTPRIME AGEPRIVATE TRANSFERSPRODUCTION FUNCTIONPRODUCTIVE ASSETSPUBLIC POLICIESREAL EXCHANGE RATEREDISTRIBUTIVE POLICIESREGIONAL LEVELREGRESSION ANALYSISRELATIVE DEMANDRELATIVE IMPORTANCERELATIVE LABORRELATIVE LABOR DEMANDRELATIVE PRICESRELATIVE SUPPLYRELATIVE WAGESRESEARCH AGENDARISING DEMANDRISING WAGE INEQUALITYSALARIED WORKERSSECONDARY EDUCATIONSECONDARY SCHOOL GRADUATESSECONDARY SCHOOLINGSECTOR EMPLOYMENTSERIAL CORRELATIONSERVICE SECTORSSIGNIFICANT CORRELATIONSIGNIFICANT EFFECTSIGNIFICANT RELATIONSHIPSKILL GROUPSKILL GROUPSSKILL LEVELSKILL LEVELSSKILL PREMIUMSKILL PREMIUMSSKILL UPGRADINGSKILL WORKERSSKILLED EMPLOYMENTSKILLED WAGESKILLED WAGE PREMIUMSKILLED WORKERSSTATE-OWNED ENTERPRISESTECHNICAL SKILLSTERTIARY EDUCATIONTOTAL EMPLOYMENTTOTAL FACTOR PRODUCTIVITYTOTAL OUTPUTTRADE LIBERALIZATIONTRADE REFORMSUNEMPLOYMENTUNEMPLOYMENT LEVELUNEMPLOYMENT RATEUNEMPLOYMENT RATESUNSKILLED LABORUNSKILLED WORKERSWAGE DIFFERENTIALWAGE DIFFERENTIALSWAGE GAPWAGE INEQUALITYWAGE LEVELWAGE LEVELSWAGE PREMIUMWAGE PREMIUMSWEALTHWORKERWORKERSWorld Bank10.1596/1813-9450-5921