The exercise helps set bounds on the aggregate effects. Reading results in tables 6 and 8 together allows me to arrive at some general conclusions on a country basis. The aggregate effect of changes in barriers and preferences on output has been expansionary in Costa Rica and Panama. Replacing the present values with those from 1995 and 2005 in the former implies a contraction of 23-40 and 9-20 percent respectively. The analogous figures for Panama stand at 75-94 and 51-84 percent. Shifts in barriers to human capital accumulation drive these economic gains. On the other hand, intertemporal variations in labor market barriers have usually proved a hindrance to growth. The qualitative role of the preference channel is difficult to pin down as it is acutely sensitive to the choice of . Taken together, the qualitative effect of the three channels on aggregate output in El Salvador is αα Taken together, the qualitative effect of the three channels on aggregate output in El Salvador is inconclusive. Moreover, the joint impact is relatively mild compared to Costa Rica and Panama. Still, it is possible to ascertain the role of some individual channels. Over the decades, both women and men are finding it preferable to stay in the home sector rather than working in market occupations. These changes are dragging the economy down. Replacing the present preferences with those in 1995 and 2005 can increase output by 5-16 and 1-13 percent respectively. The analysis also shows that shifts in human capital barriers since 1995 have been growth-enhancing. However, the estimated impact varies over a broad range. Going back to 1995 levels will lead to a compression that can be either trivial (1 percent) or sizable (19 percent).

# **7   Conclusion**

Costa Rica, El Salvador, and Panama have seen considerable economic growth over the last two decades. During the period, there has been a phenomenal shift in the occupational choices of women in these countries. Do these changes imply declines in barriers that women face in labor markets and human capital accumulation? And how important are these trends in explaining the accompanying economic growth? Building on recent literature that ties occupational distribution to the allocation of talent, I find that a better allocation of talent in Costa Rica and Panama provided substantial tailwinds for economic expansion. Conservative estimates suggest that the channel can account for almost half of the actual growth in market output per capita and a quarter of the increase in real labor earnings in Costa Rica. In Panama, the channel is even more potent and explains more than the actual growth in both variables. The aggregate implications are milder in El Salvador. Still, I find that shifts in social norms created a notable drag on growth.

I conclude by making a couple of points that have policy implications and require further consideration. First, the shift in social norms in El Salvador is surprising given the trend in other countries. Why have the preferences to be engaged in the home sector, as opposed to participating in market work, increased in the last two decades? Variation in crime and violence might be one of the factors driving the trend. For instance, the surveys will record men who join gangs as being occupied in the home sector to the extent they are not engaged in any other occupation. The income earned due to criminal activity is likely to go unreported as well. The model will interpret the two outcomes as an increase in preference for the home sector. Additionally, workers of both genders who participate in market occupations may be incrementally more exposed to victimization. If the differential risks do not lead to a loss of wages or 32