Abstract
This paper estimates the association of demographic and educational changes with earnings and returns to schooling of male workers in Brazil and Mexico. Our analysis takes into account demographic, educational, and economic variations within each country over time, using Demographic Censuses microdata from Brazil and Mexico. Results suggest that demographic and educational transitions are correlated with earnings and returns to education. Proportions of people in age-education groups tend to have negative associations with aggregated earnings. Workers with secondary education completed experience negative effects on their earnings by having lower education than university graduates (education effect) and by representing a bigger share of the population than males with university education completed (cohort size effect). The negative correlations of cohort size have been decreasing in magnitude over time. We also find that the concentration of skilled labor in specific locations has positive associations with individual earnings and that they are greater than those observed in more developed countries. Moreover, in Brazil and Mexico, these effects are observed throughout the income distribution, contrary to what is observed in studies for the United States. JEL classification codes: I2 (Education economics), J1 (Demographic economics)
Highlights
The objective of this paper is to estimate the association of demographic and educational changes with earnings of male workers in the two largest Latin American countries (Brazil and Mexico)
The proportion of those with secondary completed and university completed in Brazil and Mexico increased during the period in all age groups
Estimations suggest that changes in the composition of the workforce are associated with levels of earnings
Summary
The objective of this paper is to estimate the association of demographic and educational changes with earnings of male workers in the two largest Latin American countries (Brazil and Mexico). The second exercise looks on how the concentration of skilled workers correlates with returns to schooling (individual earnings) across regions of Brazil and Mexico. These two countries have very similar features and are passing through a rapid process of demographic and educational changes with large regional and social inequalities The study of wage differentials and the analysis of the effects of human capital concentration in developing countries are both important subjects to explore, since they are marked by larger economic differentials than developed countries
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