Working Paper: NBER ID: w24015
Authors: Sebastian Galiani; Guillermo Cruces; Pablo Acosta; Leonardo C. Gasparini
Abstract: This paper documents the evolution of wage differentials and the supply of workers by educational level for sixteen Latin American countries over the period 1991-2013. We find a pattern of rather constant rise in the relative supply of skilled and semi-skilled workers over the period. Whereas the returns to secondary education fell over time, in contrast, the returns to tertiary education display a remarkable changing pattern common to almost all economies: significant increase in the 1990s, strong fall in the 2000s and a deceleration of that fall in the 2010s. We conclude that supply-side factors seem to have limited explanatory power relative to demand-side factors in accounting for changes in the wage gap between workers with tertiary education and the rest.
Keywords: Educational upgrading; Returns to skills; Latin America; Supply-demand framework
JEL Codes: J01
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| relative supply of skilled and semi-skilled workers (J24) | decline in the returns to secondary education (I26) |
| increase in the relative supply of skilled workers (J24) | decrease in wage premiums for skilled workers (F66) |
| returns to tertiary education (I26) | significant increase in the 1990s (N12) |
| returns to tertiary education (I26) | fall sharply in the 2000s (N12) |
| returns to tertiary education (I26) | decelerated decline during the 2010s (P27) |
| changes in educational supply (I21) | inverse effect on wage premiums (J31) |
| demand shifts (J20) | pronounced impact on wage structures (F66) |