country-specific cases, given the wide variety of economic structures in Latin America in terms of the factor intensity and the weight of the industrial, commodities and non-tradable sectors.<sup>16</sup> The regressions incorporating these additional covariates are presented in columns 4-10 of Tables 4.1 and 4.2.<sup>17</sup> The regressions in columns 7 and 8 also include a series of additional control variables to those described before, such as GDP per capita and the real exchange rate against the US dollar (both from World Bank World Development Indicators). These variables are included as a specification robustness test only, since there is no clear theoretically basis to assess their impact on wage skill differentials. The main result shows that after considering these additional variables and specifications, the coefficient on the relative supply of skilled labor in Table 4.1 becomes statistically insignificant. For the case of high-school graduates vs. dropouts, the coefficient on relative supply of workers remains statistically significant (except in column 10), indicating that supply side factors are more relevant to explain the evolution of high-school wage premia rather than tertiary educated (skill) premia.

Regarding the rest of covariates, aggregate unemployment rate has a positive relationship with the two wage differentials, although it is only significantly different from zero in just a few specifications of the skilled wage premium – that in column 8, which incorporates a series of additional macro variables as controls, and that in column 10, which restricts the sample to the nine countries with a long time series (see the note in the respective tables for details). However, including separate rates for skilled and unskilled workers, as in column 6 in Table 4.1, indicates that the unemployment level for unskilled workers does have a positive correlation with the wage skill premium, suggesting that a wage curve-type of effect might depress the remuneration levels of unskilled workers more than that of skilled workers. There is no significant effect for the separate high school and dropout unemployment rate in Table 4.2.

Tables 4.1 and 4.2 also present evidence on the potential impact of minimum wages on the skill premium. The regressions in column 8 of Tables 4.1 and 4.2 include an index of minimum wage levels for each country as a dependent variable, available from 1995 onwards.<sup>18</sup> The results for the whole period under analysis indicate a negative but not statistically significant relationship between the level of minimum wages and the skilled-unskilled premium in the region, whereas the relationship is unexpectedly positive (though also not significantly different from zero) for the high school-dropout wage differential.

> 16 Net barter terms of trade index is calculated as the percentage ratio of the export unit value indexes to the import unit value indexes, measured relative to the base year 2000. Unit value indexes are based on data reported by countries that demonstrate consistency under UNCTAD quality controls, supplemented by UNCTAD’s estimates using the previous year’s trade values at the Standard International Trade Classification three-digit level as weights. To improve data coverage, especially for the latest periods, UNCTAD constructs a set of average prices indexes at the three-digit product classification of the Standard International Trade Classification revision 3 using UNCTAD’s Commodity Price Statistics, interna-tional and national sources, and UNCTAD secretariat estimates and calculates unit value indexes at the country level using the current year’s trade values as weights.

> 17 Bearing in mind the limitations of this type of cross country regressions and to avoid spurious correlations, the regressions should not be interpreted as estimating causal effects but only as multivariate correlates of the wage skill differentials.

> 18 The authors are grateful to Tim Gindling for providing the index of real minimum wage levels (based on ILO estimates) for the countries under analysis.

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