Understanding the Dynamics of Labor Income Inequality in Latin America
Since the early 2000s, after a long period of wide and persistent gaps, Latin America has experienced a steady decline in income inequality. This paper presents evidence of a trend reversal in labor income inequality, which is considered the main f...
| Main Authors: | , , , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2016/08/26695881/understanding-dynamics-labor-income-inequality-latin-america http://hdl.handle.net/10986/25040 |
| Summary: | Since the early 2000s, after a long
period of wide and persistent gaps, Latin America has
experienced a steady decline in income inequality. This
paper presents evidence of a trend reversal in labor income
inequality, which is considered the main factor behind such
a decline in income inequality across the region. The
analysis shows that, while labor income inequality increased
during the 1990s, with heterogeneous experiences across
countries, it fell in a synchronized way across countries
beginning in the early 2000s. This systematic decline was
supported by an expansion in real hourly earnings among the
bottom of the wage distribution and, to a lesser extent, the
middle part of the earnings distribution, thus reducing
upper and lower tail inequality. This trend reversal is
explained by a lower dispersion of earnings among workers
with observable different attributes and by a much less
extensive dispersion of residual labor inequality. Regarding
the earnings differentials among workers with observable
different attributes, the analysis concludes that the
decline in labor inequality in Latin America has been
closely associated with a reduction in the college/primary
education premium and in the urban-rural earnings gap,
coupled with a steady drop in the high school/primary
education premium, which accelerated markedly since the
2000s, as well as a reduction in the experience premium
across all age groups. |
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