Economic Reform and Wage Differentials in Latin America
نویسندگان
چکیده
This paper presents a new approach for exploring the relation between the implementation of economic reforms and wage differentials. It is applied to a new high quality database that includes 18 Latin American countries. The results indicate that reforms 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 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 wages.
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