earlier will already be of working age when observed for the last time by 2010, and will presumably be able to allocate their time to any of the three options.

Given the availability of data, we are able to construct 144 cohort trajectories covering the period of the life cycle of interest for the 18 countries included in our database (we exclude cohorts that we do not observe in the critical ages of interest and those for which only one observation in such period is observed). Depending on the surveys available in each case, each cohort is observed at spells of different lengths during different years.

Figure 7 plots all the cohort trajectories constructed with our data starting at age 12 and up to age 40. As can be observed, the critical turning point in life cycle trajectories in Latin America seems to be age 20. Panel A shows that precisely at age 20, between 25 and 40 percent of individuals – depending on the cohort observed- remain in the schooling system; a sharp decline is observed before this point, with smoother reductions thereafter. At the same age, around 50 percent is already in the labor market as shown in Panel B –with little variation across cohorts; this results from sharp increases in the previous years and a more stable continuous increase at older ages. In the case of the Osow group, it is interesting to observe continuous increases up to age 20 in Panel C, reaching between 25 to 30 percent and a stable trajectory after this point, with a somewhat decreasing trend to 20 percent by age 40.

Therefore, it seems that while intensive shifts take place between the three types of time use between ages 12 and 20, smoother transitions are observed thereafter, and mostly between the school and work options. According to our data, by age 25 about 68 percent of Latin Americans are in the labor market, around 10 to 15 percent remain in school at this age, and between 25 and 30 percent remain in the Osow group.<sup>14</sup> After age 25 there is relative stability in the three groups with only slight variations tending to small reductions in the share of individuals in the education system, small increases in labor force participation, and slight declines in the Osow group.

The inclusion of the series of trajectories in Figure 7 allows us to observe that there are several sources of variation. The first, that is perhaps most evident in Panel A, is that there are differences across cohorts. As can be seen, for the cohorts that start being observed when they are around age 12, one particular group shows significantly lower attendance levels of around 70 percent as compared to the group with the highest rates of about 90 percent –which belongs to the youngest cohorts. Similar differences were shown in Figure 2, and are normally labeled as a “cohort effect” reflecting different structural conditions for different generations. The change in level between the

> 14 The classification of individuals working includes those working and in school at the same time, while the category of in-school also includes those in school and working simultaneously, so Panels A and B in the Figure add up to more than 100 percent. Also, it should be noted that here we plot only school attendance, so it is possible that individuals are still in school but not necessarily attending the level or grade that would be expected given their age.

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