Twenty Years of Wage Inequality in Latin America
This paper documents an inverse U-shape in the evolution of wage inequality in Latin America since 1995, with a sharp reduction starting in 2002. The Gini coefficient of wages increased from 42 to 44 between 1995 and 2002 and declined to 39 by 2015...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2019
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/182211567536793752/Twenty-Years-of-Wage-Inequality-in-Latin-America http://hdl.handle.net/10986/32348 |
| Summary: | This paper documents an inverse U-shape
in the evolution of wage inequality in Latin America since
1995, with a sharp reduction starting in 2002. The Gini
coefficient of wages increased from 42 to 44 between 1995
and 2002 and declined to 39 by 2015. Between 2002 and 2015,
the 90/10 log hourly earnings ratio decreased by 26 percent.
The decline since 2002 was characterized by rising wages
across the board, but especially among those at the bottom
of the wage distribution in each country. Triggered by a
rapid expansion of educational attainment, the wages of
college and high school graduates fell relative to those
with primary education. The premium for labor market
experience also fell significantly. But the compression of
wages was not entirely driven by changes in the wage
structure across skill groups. Two-thirds of the decline in
the variance of wages took place within skill groups.
Changes in the sectoral, occupational, and formal-informal
composition of jobs matter for the process of reduction in
inequality, but do not fully account for the fall in
within-skill variance. Evidence using longitudinal matched
employer-employee administrative data suggests that an
important driver was falling wage dispersion across firms. |
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