Economic Policy and Wage Differentials in Latin America

Jere Behrman, Nancy Birdsall and Miguel Székely

No 29, Working Papers from Center for Global Development

Abstract: This paper applies a new approach to the estimation of the impact of policy, both the levels and the changes, on wage differentials using a new high-quality data set on wage differentials by schooling level for 18 Latin American countries for the period 1977-1998. The results indicate that liberalizing policy changes overall have had a short-run disequalizing effect of expanding wage differentials, although this effect tends to fade away over time. This disequalizing effect is due to the strong impact of domestic financial market reform, capital account liberalization and tax reform. On the other hand, privatization contributed to narrowing wage differentials and trade openness had no significant effect on wage differentials. Technological progress, rather than trade flows, appears to be a channel through which policy changes are affecting inequality.

Keywords: Latin America; wages; market reform; tax reform; technological change (search for similar items in EconPapers)
JEL-codes: G10 H20 J31 L33 O33 O57 (search for similar items in EconPapers)
Pages: 69 pages
Date: 2003-07
New Economics Papers: this item is included in nep-lab, nep-lam and nep-pbe
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Citations: View citations in EconPapers (51)

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