Abstract

BUKSTEIN, Daniel. Wage inequality analysis in Uruguay using synthetic cohorts. Pap. poblac [online]. 2019, vol.25, n.99, pp.45-75.  Epub May 25, 2020. ISSN 2448-7147.  https://doi.org/10.22185/24487147.2019.99.03.

This paper analyzes the evolution of wage inequality in Uruguay across generations using synthetic cohorts. Using repeated cross sections we study income dispersion amongst individuals born between 1924 and 1991. A decomposition methodology was used to disentangle the period, age and cohort effects. The results show that inequality, measured by the variance of log-earnings, increases steadily when comparing younger to older generations. This result is caused by an increase of the dispersion in the low and medium part of the income distribution and a rise in the ratio between high and low income percentiles. In order to explain the evolution of observed inequality between cohorts, variables related to human capital literature were used. Changes in the average years of education, its dispersion and returns to schooling explain the observed pattern in wage inequality across generations entirely.

Keywords : Inequality; wages; cohorts; Uruguay; human capital.