Educational Upgrading and Returns to Skills in Latin America : Evidence from a Supply-Demand Framework, 1990–2010
It has been argued that a factor behind the decline in income inequality in Latin America in the 2000s was the educational upgrading of its labor force. Between 1990 and 2010, the proportion of the labor force in the region with at least secondary...
| Main Authors: | , , , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20120103093606 http://hdl.handle.net/10986/3696 |
| Summary: | It has been argued that a factor behind
the decline in income inequality in Latin America in the
2000s was the educational upgrading of its labor force.
Between 1990 and 2010, the proportion of the labor force in
the region with at least secondary education increased from
40 to 60 percent. Concurrently, returns to secondary
education completion fell throughout the past two decades,
while the 2000s saw a reversal in the increase in the
returns to tertiary education experienced in the 1990s. This
paper studies the evolution of wage differentials and the
trends in the supply of workers by educational level for 16
Latin American countries between 1990 and 2000. The analysis
estimates the relative contribution of supply and demand
factors behind recent trends in skill premia for tertiary
and secondary educated workers. Supply-side factors seem to
have limited explanatory power relative to demand-side
factors, and are only relevant to explain part of the fall
in wage premia for high-school graduates. Although there is
significant heterogeneity in individual country experiences,
on average the trend reversal in labor demand in the 2000s
can be partially attributed to the recent boom in commodity
prices that could favor the unskilled (non-tertiary
educated) workforce, although employment patterns by sector
suggest that other within-sector forces are also at play,
such as technological diffusion or skill mismatches that may
reduce the labor productivity of highly-educated workers. |
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