Leonardo Gasparini, Guillermo Cruces, Sebastian Galiani, Pablo Acosta, 05 January 2018

While income dispersion significantly increased over the 1990s in most Latin American countries, the 2000s were characterised by a widespread fall in socioeconomic and labour disparities. This column uses a supply-demand framework to explore changes in labour market returns to education in the region. The relative supply of skilled labour rose consistently over the period, while the wage skill premium rose then fell. Supply-side factors seem less important than demand-side factors in accounting for changes in the skill premium, especially between workers with a tertiary education and the rest.