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Decomposing inequality changes in Uruguay: the role of formalization in the labor market

Author

Listed:
  • Verónica Amarante

    (Economic Commission for Latin America and the Caribbean)

  • Rodrigo Arim

    (Economic Commission for Latin America and the Caribbean)

  • Mijail Yapor

    (Economic Commission for Latin America and the Caribbean)

Abstract

During the first decade of the twentieth century, the Uruguayan labor market showed a significant decline in wage inequality and in the incidence of labor informality, while similar changes also took place in other Latin American countries. These trends were observed in a period of strong economic dynamism. Most extended explanations for this declining inequality in the region have been centered on falling returns to education. The main goal of this paper is to present new evidence on the relation between informality and wage inequality through a RIF-based regression decomposition analysis which, besides confirming the relevant role of education, shows that the process of labor market formalization also played a significant role in the reduction of inequality in Uruguay, mainly through a price effect. JEL Classification: D31, J31

Suggested Citation

  • Verónica Amarante & Rodrigo Arim & Mijail Yapor, 2016. "Decomposing inequality changes in Uruguay: the role of formalization in the labor market," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-20, December.
    • Handle: RePEc:spr:izaldv:v:5:y:2016:i:1:d:10.1186_s40175-016-0059-5
    DOI: 10.1186/s40175-016-0059-5
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    Cited by:

    1. 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.
    2. Mr. Jose L. Torres, 2020. "Youth Unemployment in Uruguay," IMF Working Papers 2020/281, International Monetary Fund.
    3. Facundo Quiroga‐Martínez & Esteban Fernández‐Vázquez, 2021. "Education as a key to reduce spatial inequalities and informality in Argentinean regional labour markets," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(1), pages 177-189, February.
    4. Burdín, Gabriel & De Rosa, Mauricio & Vigorito, Andrea & Vilá, Joan, 2022. "Falling inequality and the growing capital income share: Reconciling divergent trends in survey and tax data," World Development, Elsevier, vol. 152(C).
    5. Manuel Fernández & Gabriela Serrano, 2022. "New Perspectives on Inequality in Latin America," Documentos CEDE 20295, Universidad de los Andes, Facultad de Economía, CEDE.
    6. Veronica Amarante, 2017. "Inequality and Household Size: A Microsimulation for Uruguay," International Journal of Microsimulation, International Microsimulation Association, vol. 10(1), pages 73-105.
    7. repec:ijm:journl:v109:y:2017:i:1:p:73-105 is not listed on IDEAS
    8. María Eugenia Echeberría, 2024. "Female selection into employment along the earnings distribution," Documentos de Trabajo (working papers) 24-08, Instituto de Economía - IECON.

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    More about this item

    Keywords

    Inequality; Informality; Microeconometric decompositions;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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