including gender, race and sector of employment vary in a meaningful way for workers at different points of the conditional earnings distributions. The contribution of this “within” group earnings inequality to total inequality and the potential role of public policies, including labor market interventions, has not received sufficient attention in the policy discussions.

# **Further Work**

- **<u>The role of unobserved wage determinants</u>** More work needs to be done to understand the role of unobserved  determinants of earnings such as deficiencies in early-childhood development, education quality and labor market connections that would signal incentives for skill investments, ensure completion of full courses of basic education, and allow for transitions to higher education thus leveling the initial playing field and reducing the wage disparities.

- **<u>Identification of possible poverty traps</u>** Labor market signals and feedback effects to human capital accumulation through the pricing of labor (earnings returns), barriers to micro firms accessing public services broadly defined, the impact of unions, and other labor protections on educational or health services deserve greater attention as potential sources of poverty traps.

- **<u>Indirect links to distribution</u>** <u>What other factors besides SBTC may be driving the observed</u> increase in earnings gaps and how do existing institutions interact with these factors and agents’ responses to them

# **b. Women in the labor market**<sup>**39**</sup>

**_Labor Force Participation trends are converging._** Over the last 40 years, women’s labor force participation has increased in all countries in Latin America and the Caribbean, while men’s has decreased.  The proportion of working adult women ranged from 12 percent (Dominican Republic) to 54 percent (Jamaica) in 1960 and by 2000, the range was between 37 percent (Peru) and 74 percent (Jamaica).  Men’s participation, on the other hand, declined from approximately 92 percent across the region to 85 percent by the end of the century.  Not surprisingly, women’s share of the labor force also increased over this period, from approximately 20 percent of the labor force to onethird of all workers.

**_Women’s participation is driven by education, urbanization and late marriage_** : The diverging trends are due to several factors that differ by gender.  First, educational attainment has increased in the region (World Development Indicators) leading to higher human capital for women, and thus labor force entry among those whose value was previously higher in the home (Blau 1998), but a decrease in male labor force participation as boys spend more time in school rather than entering the labor market.  Over this period, the growth in women’s education attainment exceeded that of men, and in some urban centers in Latin America, women’s stock of education, particularly that of young women, exceeds that of men.  Second, rapid urbanization has lead to a formalization of the work relationship so women, who are often invisible workers in rural family businesses, became visible employees in the cities.  Third, women are marrying later, and thus must work to support themselves (Demographic and Health Surveys).  Finally, the emergence of frequent economic shocks and unemployment in the region has increased the need for female labor to cushion the household from negative income shocks (Geldstein 2000, World Bank 2000, Cunningham 2000).

> 39 See background work by Cunningham (2003)

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