Skip to main content
Article thumbnail
Location of Repository

Economics Reform and Wage Differentials in Latin America

By Miguel Székely, Nancy Birdsall and Jere R. Behrman


This paper develops and applies a new approach to the estimation of the impact of economy-wide reforms on wage differentials, using a new high-quality data set on wage differentials by schooling level for 18 Latin American countries for the period 1980-1998. The results indicate that reform overall has had a short-run disequalizing effect of expanding wage differentials, although this effect tends to fade 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 effect on wage differentials. Technological progress, rather than trade flows, appears to be a channel through which reforms are affecting inequality. The paper also explores the effects of reforms on wage levels; tentative results suggest that reforms have had a positive effect on real average wages, but a negative effect on the wages of less-schooled workers. Keywords: reform, inequality, wages, trade, distribution

OAI identifier:

Suggested articles


  1. (1999). Ability’ Biases in Schooling Returns and Twins:
  2. (2000). An Asset-Based Approach to the Analysis of Poverty in Latin America.” In:
  3. (1997). Asset Inequality Matters: An Assessment of the World Bank’s Approach to Poverty Reduction.” American Economic Review. Papers and Proceedings,
  4. (1992). Changes in Relative Wages, 1963-1987: Supply and Demand Factors.”
  5. (1992). Changes in Relative Wages, 1963-1987: The Role of Declining
  6. (1994). Changes in the Demand for Skilled Labor within U.S.
  7. (2000). Das Human Capital.”
  8. (1998). Deep Integration and Trade Agreements: Good for Developing Countries.” In.
  9. (1970). Education in Production.”
  10. (1997). Employment and Wage Effects of Trade Liberalization: The Case of
  11. (1992). Exporting Jobs? The Impact of Import Competition on Employment and Wages in US.
  12. (1999). Facing Up to Inequality in Latin America: Economic and Social Progress Report 1998-1999. , Johns Hopkins
  13. (2000). Foreign Direct Investment: Good Cholesterol?” Working Paper 417.
  14. (1999). Importing Equality? The Effects of Increased Competition on the Gender Wage
  15. (1999). Income Distribution, Factor Endowments,
  16. (2000). Industrial Statistics Data Base.”
  17. (2000). Inequality and Economic Growth: The Perspective of the New Growth Theories.”
  18. (1995). Inequality and Growth Reconsidered: Lessons from East Asia.” World Bank Economic Review.
  19. (1999). Intergenerational Mobility in Latin America: Deeper Markets and Better Schools Make a Difference.” In:
  20. (1986). Labor Supply of Men: A Survey.” In:
  21. (1997). Latin America After a Decade of Reforms: Economic and Social Progress Report
  22. (1999). Managing Inequality in the Developing World.” Current History.
  23. (1996). Measuring Income Inequality: A New Data Base.” World Bank Economic Review.
  24. (1997). Openness and Wage Inequality in Developing Countries: The Latin American Challenge to
  25. (1997). Sharing the Costs: The Impact of Trade Reform on Capital and Labor in
  26. (1993). Testing the Imports-As-Market-Discipline Hypothesis.”
  27. (2000). The Impact of Structural Reforms on Growth in Latin America and the Carribbean: An Empirical Estimation. ” Santiago, Chile: Economic Commission for Latin America and the Caribbean. Mimeographed document.
  28. (1996). The Quality of Schooling and Labor Market Outcomes in Brazil: Some Further Explorations.” In:
  29. (1985). The Quality of Schooling:
  30. (1988). The Reward for Good Timing: Cohort Effects and Earnings Functions for
  31. (1997). Trade and Income Distribution.
  32. (1989). Trade Policy and Market Structure.
  33. (1997). Una Década de Reformas Estructurales en America Latina: Qué ha Sido Reformado y Como Medirlo.” Working Paper 348.
  34. (1986). Wage Determinants: A Survey and Reinterpretation of Human Capital Earnings Functions.” In:
  35. What’s Behind the Inequality We Measure? An Investigation Using Latin American Data.” Working Paper 409.
  36. (1999). Who Gains from Trade Reform? Some Remaining Puzzles.”
  37. (1995). Why Are There Returns in
  38. (2000). World Development Indicators,
  39. (1999). World Income Inequality Database”.

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.