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Educational Upgrading and Returns to Skills in Latin America: Evidence from a Supply-Demand Framework

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  • Sebastian Galiani
  • Guillermo Cruces
  • Pablo Acosta
  • Leonardo C. Gasparini

Abstract

This paper documents the evolution of wage differentials and the supply of workers by educational level for sixteen Latin American countries over the period 1991-2013. We find a pattern of rather constant rise in the relative supply of skilled and semi-skilled workers over the period. Whereas the returns to secondary education fell over time, in contrast, the returns to tertiary education display a remarkable changing pattern common to almost all economies: significant increase in the 1990s, strong fall in the 2000s and a deceleration of that fall in the 2010s. We conclude that supply-side factors seem to have limited explanatory power relative to demand-side factors in accounting for changes in the wage gap between workers with tertiary education and the rest.

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  • Sebastian Galiani & Guillermo Cruces & Pablo Acosta & Leonardo C. Gasparini, 2017. "Educational Upgrading and Returns to Skills in Latin America: Evidence from a Supply-Demand Framework," NBER Working Papers 24015, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:24015
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    Cited by:

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    2. Bhalotra, Sonia & Fernandez Sierra, Manuel, 2018. "The distribution of the gender wage gap," ISER Working Paper Series 2018-10, Institute for Social and Economic Research.
    3. Sam Jones & Thomas Pave Sohnesen & Neda Trifkovic, 2023. "Educational expansion and shifting private returns to education: Evidence from Mozambique," Journal of International Development, John Wiley & Sons, Ltd., vol. 35(6), pages 1407-1428, August.
    4. Verónica AMARANTE & Rodrigo ARIM, 2023. "Inequality and informality revisited: The Latin American case," International Labour Review, International Labour Organization, vol. 162(3), pages 431-457, September.
    5. Francisco H G Ferreira & Sergio P Firpo & Julián Messina, 2022. "Labor Market Experience and Falling Earnings Inequality in Brazil: 1995–2012," The World Bank Economic Review, World Bank, vol. 36(1), pages 37-67.
    6. Gustavo Canavire-Bacarreza & Luis C. Carvajal-Osorio, 2020. "Two Stories of Wage Dynamics in Latin America: Different Policies, Different Outcomes," Journal of Labor Research, Springer, vol. 41(1), pages 128-168, June.
    7. Fernández, Manuel & Messina, Julián, 2018. "Skill premium, labor supply, and changes in the structure of wages in Latin America," Journal of Development Economics, Elsevier, vol. 135(C), pages 555-573.
    8. Manuel Fernández & Gabriela Serrano, 2022. "New Perspectives on Inequality in Latin America," Documentos CEDE 20295, Universidad de los Andes, Facultad de Economía, CEDE.
    9. Puggioni Daniela & Calderón Mariana & Cebreros Alfonso & Fernández León & Inguanzo José A. & Jaume David, 2022. "Inequality, Income Dynamics, and Transitions of Mexican Workers," Working Papers 2022-14, Banco de México.
    10. Carlos Rodríguez‐Castelán & Luis Felipe López‐Calva & Nora Lustig & Daniel Valderrama, 2022. "Wage inequality in the developing world: Evidence from Latin America," Review of Development Economics, Wiley Blackwell, vol. 26(4), pages 1944-1970, November.
    11. Carlo Lombardo & Lucía Ramírez Leira & Leonardo Gasparini, 2024. "Does the Minimum Wage Affect Wage Inequality? A Study for the Six Largest Latin American Economies," Journal of Development Studies, Taylor & Francis Journals, vol. 60(4), pages 494-510, April.
    12. Kunst, David & Freeman, Richard B. & Oostendorp, Remco, 2022. "Occupational Skill Premia around the World: New Data, Patterns and Drivers," Labour Economics, Elsevier, vol. 79(C).
    13. Sam Jones & Thomas Pave Sohnesen & Neda Trifković, 2018. "The evolution of private returns to education during post-conflict transformation: Evidence from Mozambique," WIDER Working Paper Series wp-2018-143, World Institute for Development Economic Research (UNU-WIDER).
    14. Sam Jones & Neda Trifkovic & Thomas Sohnesen, 2018. "The evolution of private returns to education during post-conflict transformation: Evidence from Mozambique," WIDER Working Paper Series 143, World Institute for Development Economic Research (UNU-WIDER).
    15. Lebow, Jeremy, 2024. "Immigration and occupational downgrading in Colombia," Journal of Development Economics, Elsevier, vol. 166(C).
    16. Leonardo Fabio Morales & Christian Posso & Luz A. Flórez, 2021. "Heterogeneity in the Returns to Tertiary Education for the Disadvantage Youth: Quality vs. Quantity Analysis," Borradores de Economia 1150, Banco de la Republica de Colombia.
    17. Lucía Ramírez Leira & Carlo Lombardo & Leonardo Gasparini, 2021. "The Effect of the Minimum Wage in Latin America's six largest economies," Asociación Argentina de Economía Política: Working Papers 4512, Asociación Argentina de Economía Política.
    18. Daniela Puggioni & Mariana Calderón & Alfonso Cebreros Zurita & León Fernández Bujanda & José Antonio Inguanzo González & David Jaume, 2022. "Inequality, income dynamics, and worker transitions: The case of Mexico," Quantitative Economics, Econometric Society, vol. 13(4), pages 1669-1705, November.
    19. Eréndira León Bravo, 2022. "Three essays on education, wages, and the labour market in Mexico," Economics PhD Theses 0322, Department of Economics, University of Sussex Business School.
    20. Campos-González, Jorge & Balcombe, Kelvin, 2024. "The race between education and technology in Chile and its impact on the skill premium," Economic Modelling, Elsevier, vol. 131(C).

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