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...

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Main Authors: Messina, Julian, Silva, Joana
Format: Working Paper
Language:English
Published: World Bank, Washington, DC 2019
Subjects:
Online Access:http://documents.worldbank.org/curated/en/182211567536793752/Twenty-Years-of-Wage-Inequality-in-Latin-America
http://hdl.handle.net/10986/32348
id okr-10986-32348
recordtype oai_dc
spelling okr-10986-323482022-09-20T00:13:51Z Twenty Years of Wage Inequality in Latin America Messina, Julian Silva, Joana INEQUALITY LABOR MARKET FIRM DYNAMIC DEVELOPMENT EXPERIENCE PREMIUM SCHOOLING PREMIUM INFORMALITY WAGES WAGE GAP GINI COEFFICIENT EDUCATIONAL ATTAINMENT 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. 2019-09-05T15:36:25Z 2019-09-05T15:36:25Z 2019-09 Working Paper http://documents.worldbank.org/curated/en/182211567536793752/Twenty-Years-of-Wage-Inequality-in-Latin-America http://hdl.handle.net/10986/32348 English Policy Research working paper,no. WPS 8995; CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Latin America & Caribbean Latin America
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
topic INEQUALITY
LABOR MARKET
FIRM DYNAMIC
DEVELOPMENT
EXPERIENCE PREMIUM
SCHOOLING PREMIUM
INFORMALITY
WAGES
WAGE GAP
GINI COEFFICIENT
EDUCATIONAL ATTAINMENT
spellingShingle INEQUALITY
LABOR MARKET
FIRM DYNAMIC
DEVELOPMENT
EXPERIENCE PREMIUM
SCHOOLING PREMIUM
INFORMALITY
WAGES
WAGE GAP
GINI COEFFICIENT
EDUCATIONAL ATTAINMENT
Messina, Julian
Silva, Joana
Twenty Years of Wage Inequality in Latin America
geographic_facet Latin America & Caribbean
Latin America
relation Policy Research working paper,no. WPS 8995;
description 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.
format Working Paper
author Messina, Julian
Silva, Joana
author_facet Messina, Julian
Silva, Joana
author_sort Messina, Julian
title Twenty Years of Wage Inequality in Latin America
title_short Twenty Years of Wage Inequality in Latin America
title_full Twenty Years of Wage Inequality in Latin America
title_fullStr Twenty Years of Wage Inequality in Latin America
title_full_unstemmed Twenty Years of Wage Inequality in Latin America
title_sort twenty years of wage inequality in latin america
publisher World Bank, Washington, DC
publishDate 2019
url http://documents.worldbank.org/curated/en/182211567536793752/Twenty-Years-of-Wage-Inequality-in-Latin-America
http://hdl.handle.net/10986/32348
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