Wage compression and the decline in inequality in Latin America: Good or bad?
Eduardo Levy Yeyati, Samuel Pienknagura 10 June 2014
Latin America’s inequality has fallen, driven by a reduction in the educational wage premium. This column discusses potential driving forces behind this phenomenon and argues that while this is a positive outcome, it may reflect a deeper malaise. A preliminary evaluation suggests that supply changes are more important than de-industrialisation. But lacklustre PISA scores support a more dismal hypothesis. The premium decrease may mirror a decline in education quality.
Unlike most of the developed world, Latin America has seen a notable decline in income inequality in the last decade.
Development Education Poverty and income inequality
Latin America, education quality, skills supply