# **Table of contents**

|**1**<br>**INTRODUCTION ........................................................................................................................................................ 3**|
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|**2**<br>**MOTIVATION ............................................................................................................................................................. 4**|
|2.1<br>SECULAR TRENDS IN EDUCATION............................................................................................................................ 4|
|2.2<br>TRENDS IN INEQUALITY........................................................................................................................................... 4|
|**3**<br>**EVOLUTION OF THE WAGE SKILL PREMIUM IN LATIN AMERICA: APPROACH AND STYLIZED**<br>**FACTS ..................................................................................................................................................................................... 5**|
|3.1<br>METHODOLOGY....................................................................................................................................................... 5|
|3.2<br>ESTIMATION OF WAGE SKILL PREMIA,RELATIVE SUPPLY,AND RELATIVE DEMAND FACTORS............................... 8|
|**4**<br>**WAGE SKILL PREMIUM AND CORRELATED FACTORS ........................................................................... 11**|
|4.1<br>SKILL PREMIUMS AND RELATIVE SUPPLIES:SIMPLE CORRELATIONS.................................................................... 11|
|4.2<br>SKILL PREMIUM CORRELATES BEYOND RELATIVE SUPPLY................................................................................... 12|
|**5**<br>**CHANGES IN THE EMPLOYMENT STRUCTURE .......................................................................................... 16**|
|5.1<br>FACTORS RELATED TO CHANGES IN THE EMPLOYMENT STRUCTURE.................................................................... 16|
|5.2<br>SKILL COMPOSITION BY SECTOR........................................................................................................................... 18|
|**6**<br>**CONCLUSION ........................................................................................................................................................... 20**|
|**7**<br>**REFERENCES ........................................................................................................................................................... 21**|
|**8**<br>**FIGURES ..................................................................................................................................................................... 23**|
|**9**<br>**TABLES ....................................................................................................................................................................... 30**|
|**A.**<br>**METHODOLOGICAL APPENDIX ........................................................................................................................ 35**|
|A1.BASICKATZ ANDMURPHY(1992)SUPPLY AND DEMAND FRAMEWORK WITH TWO INPUTS....................................... 35<br>A2.AUGMENTED MODEL WITH THREE LEVELS OF SKILLS.................................................................................................. 35|
|**B.**<br>**EMPIRICAL CALCULATIONS OF WAGE PREMIA ....................................................................................... 37**|
|B1.THESEDLACDATASET AND SAMPLE......................................................................................................................... 37|
|B2.CONSTRUCTION OF WAGE PREMIA................................................................................................................................ 37|
|B3.CONSTRUCTION OF RELATIVE SUPPLIES....................................................................................................................... 38|
|B4.CONSTRUCTION OF RELATIVE DEMANDS...................................................................................................................... 39|
|**C.**<br>**APPENDIX: EVOLUTION OF RELEVANT VARIABLES OVER TIME BY COUNTRY ........................... 40**|
|C1.WAGE PREMIUMS,RELATIVE SUPPLY AND RELATIVE DEMAND: COUNTRY-SPECIFIC TRENDS.................................... 40|
|C2.WAGE PREMIUMS AND RELATIVE SUPPLIES:EVOLUTION AND SCATTER PLOTS BY COUNTRY..................................... 46|
|C3.WAGE SKILL PREMIUMS AND TERMS OF TRADE:EVOLUTION AND SCATTER PLOTS BY COUNTRY............................... 50|

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