What changes the skill premium in South America?

Abstract

In this article, it is analyzed which variables limit the reduction of inequality in South America, as measured by the skill premium, in the period of economic stagnation 2016-2019. It considers the variables that explain the decline in inequality in the region in 2002-2015 and applies a generalized ordered Probit model to identify which variables would be limiting its reduction in 2016-2019. The results show that governance, human capital, and productivity are the dimensions that most affect the ability of countries in the region to reduce their skill premium.