Brazil. We drop observations with inconsistent income reports and missing data on any of the variables of interest. **16** Worker characteristics are captured by dummy variables to facilitate isolating changes in _counterfactual_ wage distributions for narrowly defined groups based on human capital attributes such as age, education, occupational skills and tenure (only in Argentina), job characteristics as captured by category'<sup>7</sup> and sector of employment, and other regional (except Argentina) and demographic controls (i.e., marital and headship status, and race in Brazil).'<sup>8</sup> In the central specification'<sup>9</sup> , which is based on nine ageeducation (skill) groups, the comparison (control) groups used to assess relative wage performance correspond to single, white (in Brazil), non-head, professional workers older than 45 with college or more, more than 10 years of tenure (in Argentina), employed in financial/business services and formal sector firms. In Brazil and Costa Rica, the richest region is used as base (Southeast and Central, respectively).

# **4. Overall Labor Market Trends**

We first briefly describe the main trends in male labor market outcomes in each country.<sup>2 0</sup> We begin with changes in the patterns of labor force and sectoral participation, and changes in the characteristics of the work force by sector of employment. We then examine the incidence and duration of unemployment as well as real wage changes for broad age and education groups.

# **4.1 Labor Force Participation and Work force Characteristics**

Table 1 presents statistics on male labor force and sectoral participation by groups of workers in the three countries. Overall, labor force participation increased in Argentina and Costa Rica and declined in Brazil during the relevant periods, but the changes are all less than 1 percentage point. Less than half of younger men (age 15-20) participate in Argentina and Costa Rica, and a somewhat higher proportion does in Brazil. Their participation declined in Argentina and Brazil, presumably as a result of more continuity in schooling, but increased slightly in Costa Rica. Participation of those age 20-25 is considerably higher and increased significantly in Costa Rica and Argentina but declined in Brazil. Virtually all middle-age men (prime age and age 35-45)

**_15_** We use national currencies to avoid the measurement problems that trade imbalances (which often pervaded in these economies) may cause to US dollars conversions. However, due to the numerous changes in currency in Brazil during the period of hyperinflation the US dollar translation was deemed more appropriate. IPCs are used to obtain real values.

**16** Estimates of labor market statistics were not significantly affected by exclusion of these non-responses.

**17** This measures differences in wages across sectors that are unaccounted by observable characteristics. However, as stressed by Maloney (1998a, 1998b), these cannot be interpreted as evidence of existence of a dual labor market. Earnings differentials arising from different taxation, unobservable entrepreneurial ability, tastes differences are all likely to affect individual sectoral choices of employment and this effect can be confounded with any "true" sectoral differences in earnings.

**is** See Appendix I for precise definitions of all variables across countries.

19 The second specification, not discussed further, differentiates between complete and incomplete degrees but do not use age-education interactions. Workers age 35-45 with college or more serve as a control group. This is not discussed further since the results are consistent with those reported here.

**20** Saavedra (1999) characterizes overall trends in female labor market outcomes.

10