Efforts and inequality of opportunity in the Bolivian labor market

Ricardo Nogales () and Fátima Rico
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Ricardo Nogales: Centro de Investigaciones Económicas y Empresariales, Universidad Privada Boliviana
Fátima Rico: Centro de Investigaciones Económicas y Empresariales, Universidad Privada Boliviana

Investigación & Desarrollo, 2015, vol. 2, issue 1, 5-14 pages

Abstract: The equitable distribution of income and the level of human development are key differentiating characteristics of developed and developing countries. In this paper, efforts and other variables related to circumstances of individuals are quantified and simultaneously analyzed alongside traditional determinants of income in order to provide novel explanations of inequality among workers in Bolivia. Our contribution is the estimation and analysis of traditional Mincer equations combined with John Roemer’s Inequality of Opportunity approach. We find that efforts are important determinants of wage inequality in the country as well as regional development and informality. Thus we separate the portion of wage inequality that may be attributed to situations that are beyond the control of individuals and can be attributed to willingly taken decisions. Microsimulations show that it is possible to reduce inequality up to 21 percentage points if people are given chances to make similar efforts to improve their labor outcomes.

Keywords: Inequality; labor markets; opportunities (search for similar items in EconPapers)
JEL-codes: C10 O10 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:iad:wpaper:0115

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