Wage inequality and structural reform: evidence from Colombia

Abstract

"The purpose of this paper is to evaluate the causes of the early decline as well as the recent increase in wage inequality in Colombia. In particular, we relate changes in wage differentials to the gap between the rate of growth of the relative demand for more-skilled workers and the relative supply of such workers. Similarly, this paper argues that the earlier reduction in wage differentials is related to the increase in the relative supply of relatively more-educated workers at a time when no major shifts in the relative demand were observed. Therefore, the paper also explores for the causes of changes in relative labor demand."