inequality, as well as the overall skill premium.<sup>30</sup> This would be consistent with the reduction in differences in pay across firms in Brazil and Ecuador, as documented in section 7.

To sum up, the commodity boom played a role, but the exact magnitude of its effect in each country remains open to debate. Moreover, most evidence is limited to Brazil, where the share of the workforce employed in the commodity sector is higher than in other countries in South America. Evidence from other countries would be highly valuable.

_Trade._ Over the past four decades, countries in Latin America have implemented dramatic trade liberalizations. The literature has studied extensively the effects on the economywide skill premium, including those of Mexico’s accession to the General Agreement on Tariffs and Trade (GATT), and Chile’s (in the 1970s), Colombia’s (in the 1980s), Argentina and Brazil’s (in the early 1990s) trade liberalizations (see Goldberg and Pavcnik (2007, 2016) and Pavcnik (2017) for surveys). The standard version of the Heckscher-Ohlin model predicts that trade liberalization reduces wage inequality when a typical country in Latin America integrates with a country such as the United States. This occurs because trade shifts production toward unskilled labor-intensive industries, raising the relative demand for, and therefore wages of, unskilled labor. Yet, this prediction is reversed, for instance, when more protected sectors prior to the trade liberalization were the relatively unskilled labor-intensive sectors (Revenga 1997; Robertson 2004), tariff reductions are concentrated on unskilled labor-intensive sectors (Attanasio, Goldberg, and Pavcnik 2004), or trade liberalization takes place simultaneously with other more unskilled labor abundant countries (Davis 1996). In line with these ambiguous predictions, and focusing on short-run effects, trade liberalizations in Latin America in the 1980s and 1990s reduced the overall skill premium in some countries (see, for example, Gonzaga, Menezes-Filho, and Terra (2006), Ferreira, Leite, and Wai-Poi (2010), and Menezes-Filho and Muendler (2011) for evidence on Brazil), while they increased it in others (see, for example, Galiani and Sanguinetti (2003) for evidence on Argentina; Attanasio, Goldberg, and Pavcnik (2004) for evidence on Colombia; Revenga (1997) and Robertson (2004) for evidence on Mexico; and Goldberg and Pavcnik (2007, 2016), and Pavcnik (2017) for surveys).

> 30There is great heterogeneity in export participation across firms. Only a minority of firms export, and the exporters are larger, more productive, and pay higher wages than non-exporters, contributing to within-sector wage inequality (Bernard and Jensen 1999; Greenaway and Kneller 2007; Roberts and Tybout 1996). Moreover, in response to trade liberalization, sector-level productivity rises, but this appears to be mainly because of reallocation within sectors toward more efficient firms: more-productive firms grow and less-productive firms shrink or die (Bernard and Jensen 1999; Clerides, Lach, and Tybout 1998; Pavcnik 2002). In a linked literature, Pavcnik (2002) and Fernandes (2007) show the importance of reallocation and withinfirm productivity improvement. In this setting, wage inequality arises from differences between exporting and non-exporting firms for observationally similar workers.

31