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Economic Policy and Wage Differentials in Latin America

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Author Info
Jere R. Behrman ()
Nancy Birdsall
Miguel Székely

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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.

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File URL: http://www.cgdev.org/content/publications/detail/2761
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Publisher Info
Paper provided by Center for Global Development in its series Working Papers with number 29.

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Length: 69 pages
Date of creation: Jul 2003
Date of revision:
Handle: RePEc:cgd:wpaper:29

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Web page: http://www.cgdev.org

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Related research
Keywords: Latin America wages market reform tax reform technological change

Find related papers by JEL classification:
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Boundaries of Public and Private Enterprise; Privatization; Contracting Out

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  1. Gordon H. Hanson, 2005. "Globalization, Labor Income, and Poverty in Mexico," NBER Working Papers 11027, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Woessmann, Ludger & Fuchs, Thomas, 2005. "Families, schools, and primary-school learning : evidence for Argentina and Colombia in an international perspective," Policy Research Working Paper Series 3537, The World Bank. [Downloadable!]
  3. Pavcnik, Nina & Blom, Andreas & Goldberg, Pinelopi & Schady, Norbert, 2003. "Trade liberalization and labor market adjustment in Brazil," Policy Research Working Paper Series 2982, The World Bank. [Downloadable!]
  4. Airola, Jim & Juhn, Chinhui, 2005. "Wage Inequality in Post-Reform Mexico," IZA Discussion Papers 1525, Institute for the Study of Labor (IZA). [Downloadable!]
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  5. Milanovic, Branko & Squire, Lyn, 2005. "Does tariff liberalization increase wage inequality ? - Some empirical evidence," Policy Research Working Paper Series 3571, The World Bank. [Downloadable!]
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  6. Leonardo Gasparini & Matías Horenstein & Sergio Olivieri, 2006. "Economic Polarisation in Latin America and the Caribbean: What do Household Surveys Tell Us?," Working Papers 0038, CEDLAS, Universidad Nacional de La Plata. [Downloadable!]
  7. Sanchez-Paramo, Carolina & Schady, Norbert, 2003. "Off and running? Technology, trade and the rising demand for skilled workers in Latin America," Policy Research Working Paper Series 3015, The World Bank. [Downloadable!]
  8. G. Arabsheibani & Francisco Carneiro & Andrew Henley, 2006. "Changes in human capital and earnings inequality: Recent evidence from Brazil 1," The Journal of Development Studies, Taylor and Francis Journals, vol. 42(5), pages 837-867, July. [Downloadable!] (restricted)
  9. Morley, Samuel A., 2001. "Distribution and growth in Latin America in an era of structural reform," TMD discussion papers 66, International Food Policy Research Institute (IFPRI). [Downloadable!]
  10. Leonardo Gasparini & Federico Gutiérrez & Guido G. Porto, 2005. "Trade and Labor Outcomes in Latin America's Rural Areas: A Cross-Household Surveys Approach," Working Papers 0025, CEDLAS, Universidad Nacional de La Plata. [Downloadable!]
  11. Alessandra Bonfiglioli, 2005. "Equities and Inequality," Economics Working Papers 947, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
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  12. Francisco Gallego, 2006. "Skill Premium in Chile: Studying the Skill Bias Technical Change Hypothesis in the South," Working Papers Central Bank of Chile 363, Central Bank of Chile. [Downloadable!]
  13. Terra, Maria Cristina T. & Menezes Filho, Naércio Aquino & Gonzaga, Gustavo, 2005. "Trade Liberalization and the Evolution of Skill Earnings Differentials in Brazil," Economics Working Papers (Ensaios Economicos da EPGE) 585, Graduate School of Economics, Getulio Vargas Foundation (Brazil). [Downloadable!]
    Other versions:
  14. Leonardo Gasparini, 2003. "Argentina´s Distributional Failure: The role of Integration and Public Policies," Working Papers 0001, CEDLAS, Universidad Nacional de La Plata. [Downloadable!]
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