Labor Market Trajectories in Latin America and the Caribbean: A Synthetic Panel Analysis

Abstract

Following the seminal work of Deaton (1985), pseudo-panels (or synthetic panel) analysis has been widely used in the context of consumption and income (e.g. Deaton and Paxson, 1994; Banks, Blundell, and Brugiavini, 2001; Pencavel, 2007). In Latin America, the synthetic panel approach has been used primarily to examine income mobility (e.g. Calonico, 2006; Navarro, 2006; Nopo, 2011; Ferreira et al., 2013). Recent applications in other contexts include Szekely and Karver (2015) for analyzing the phenomena of youth out of school and out of work, Bentaouet-Kattan and Szekely (2015) in the context of school attendance, and Levy and Szekely (2016) to study the relation between schooling and formality. In this analysis, we use synthetic panels for nine LAC countries from 1992 to 2014, to explore labor market trajectories over the life cycle. Other studies have investigated the evolution of labor earnings in the region (e.g. Duryea et al., 2002; Brambilla and Tortarolo, 2014), but as far as we know, this is the first analysis using synthetic panels to examine labor market trajectories over the life cycle.