regional diversity in reform experiences, from the early but gradual Costa Rican process, the swift and sustained Argentine program, and the stop-go nature of the Brazilian reform approach. Furthermore, these countries capture some of the considerable diversity in economic structure across the region, from the relatively large industrial sectors with a relatively skilled labor force in Argentina and a less skilled workforce in Brazil, to the smaller scale _maquilas,_ bigger service orientation, and continuing welfare state tradition that backs a well educated labor force in the small Costa Rican economy.

We consider two years covering a period of more intense reform efforts, specifically the periods 1988-97 for Argentina, and 1989-95 for Brazil and Costa Rica. Although some began earlier (in the mid-late 1980s), economic reforms were introduced or deepened to varying degrees during these periods. Although this only allows a rough snapshot of the labor markets in two points in time, these years take into account the general trends during the periods. They are also chosen to control for business cycle fluctuations (as measured by GDP growth and inflation trends) and maximize data comparability both within and across countries.<sup>3</sup> Here we briefly outline the major macroeconomic changes and reforms that operated in the three economies during these periods. Rather than a comprehensive account, we focus on the key developments that may have affected labor markets.<sup>4</sup>

# **Argentina**

The cornerstone of the Argentine economic policy program during the period was the convertibility plan. The key to this plan, introduced in 1991, was a new monetary system based on a fully convertible exchange rate regime which fixed the rate of the Argentine peso at 1:1 to the US dollar and abolished all capital and exchange controls. It also comprised a wide variety of structural adjustment measures including public sector, trade, and financial reforms that were accompanied by a massive program of privatization and deregulation of the economy. For instance, from the late 1980s to 1991 the average protection of tariffs and paratariffs declined from 28 to 15 percent, to a range of 0-22 percent down from 0-55 percent.<sup>5</sup> Between 1989 and 1992, a total of 51 firms were privatized and employment in public enterprises declined drastically from 250,000 to 60,000 employees.<sup>6</sup> According to Pessino (1997) the major developments in the Argentine labor market associated with the implementation of the convertibility plan during this period were: 1) an increase in the relative price of labor with respect to capital, motivated by the

> _3We_ pick 1988 as starting year for Argentina despite the recession because inflation was relatively lower and since the reform program was started in 1991. Both real wages and unemployment rose during 1988-91 and 1991-95, declined during 1995-97, but remained higher in 1997 than during 1988-95 so that a 1997 vs. 1988 comparison reveals the period dominant trend. For a year-to-year analysis of male real wages and unemployment in Argentina, see Arias (1999).

> 4 For a comprehensive review of the reforn and adjustment process in the region see Edwards (1995) and IDB (1997). For country-specific studies, see for instance World Bank (1996), Report No. 15402-Ar and Pessino (1997) for Argentina, Cespedes and Jimenez (1994) for Costa Rica, and Baer (1995) for Brazil. 'Edwards (1995).

6 op. cit.

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