Labour market conditions improved during the 2000s in Latin America, a process that included a reduction in the magnitude of informal employment. A decline of wage inequality was another feature of this period. Both dynamics were particularly intense in Argentina. The purpose of this study is to evaluate the role played by the process of formalization of the labour market that occurred in Argentina during that period on the reduction of income inequality, while additionally taking into account other factors that might have also contributed to such dynamics of income inequality. The method employed is a decomposition proposed by Firpo, Fortin and Lemieux, which allows extending the OaxacaBlinder approach to decompose some distributive statistics of income between a 'composition effect' and a 'returns effect'. The study concludes that the process of increasing labour market formalization had an equalizing effect over the period, a finding that had not been emphasized in previous studies.

This article provides a comparative analysis of the distribution effects of the increase in the real value of the minimum wage in Latin America during the 2000s in four Latin American countries: Argentina, Brazil, Chile and Uruguay. Using semiparametric techniques to estimate counterfactual density functions, the authors find that the increase in the minimum wage had an equalizing effect in Argentina, Brazil and Uruguay, but not in Chile. This increase accounted for a considerable part of the decline in wage inequality, which was the result of compression at the lower tail of the wage distribution.

No abstract

In the last decade Argentina experienced a process of wage inequality reduction that is in stark contrast with the trends of the previous decade. The purpose of this study is to analyze the contribution of different factors to this process. The method employed is a decomposition proposed by Lemieux (2007, 2011), which allows extending the Oaxaca-Blinder approach to decompose some distributive statistics of income between a 'composition effect' and a 'returns effect'. Similar to other studies, the results reveal that declining returns to education have been a major factor explaining the improvement in the distribution of income observed in the 2003-2012 period. However, the process of labor formalization has also had an equalizing effect over the period.

Resumen A lo largo de la década de 2000 se observa una recuperación del valor real del salario mínimo en América Latina. Este estudio analiza, de manera comparativa, los impactos distributivos del fortalecimiento de esta institución en cuatro países de la región, Argentina, Brasil, Chile y Uruguay. A partir de técnicas semiparamétricas que permiten estimar funciones de densidad contrafactuales se comprueba que, con excepción de Chile, en los otros tres países dichos cambios han sido igualadores, pues explican una porción significativa de la caída de la desigualdad. A su vez, esta reducción ha estado originada en la compresión de la parte inferior de la distribución salarial.