The Dynamics of Earnings in Chile

Cristóbal Huneeus and Andrea Repetto (andrea.repetto@uc.cl)

No 183, Documentos de Trabajo from Centro de Economía Aplicada, Universidad de Chile

Abstract: This paper provides an empirical analysis of individual earnings using data from the Encuesta Suplementaria de Ingresos. We find that the predictable component of income is hump-shaped over the life-cycle, and that there are strong education effects. The unpredictable component of income can be described by a very persistent permanent shock and a transitory shock. Our estimates are built from a panel of cohorts, so we use US data from the PSID to provide a magnitude for the underestimation of the estimated variances. Surprisingly, we find that the variance of the permanent shock is almost 4 times smaller in Chile than in the US, a result, perhaps, of the relative rigidity of the Chilean labor market.

Date: 2004
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Citations: View citations in EconPapers (6)

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Related works:
Chapter: The Dynamics of Earnings in Chile (2005)
Working Paper: The Dynamics of Earnings in Chile (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:edj:ceauch:183

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