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Understanding the Dynamics of Labor Income Inequality in Latin America

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Document

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Understanding the Dynamics of Labor Income Inequality in Latin America

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Experts from many international, regional and national agencies generously share their views, experiences and findings on skills, helping policy-makers among other stakeholders to understand the linkages between education, training and the world of work, and how to integrate skills into national development planning to promote employment and economic growth.

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skpOSource

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other-sources

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Access to training

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Access for all to good quality education, vocational training and workplace learning is a fundamental principle of social cohesion and economic growth. Some groups of people may require targeted attention if they are to benefit from education, training and employment opportunities.

This is particularly the case for disadvantaged youth, lower skilled workers, people with disabilities, and people in rural communities. The attractiveness of vocational education and training is enhanced when combined with entrepreneurship training and when public policies encourage utilization of higher skills by business.

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skpATSU

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access-to-training

Research papers

Working papers, reports, and other publications from international organizations, academic institutions and bilateral agencies. Research findings to stimulate informed debate on skills, employment and productivity issues.

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skpRPS

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research-papers

Publication Date:

18 Nov 2016

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wcmstest4_185094.pdf

Since the early 2000s, after a long period of wide and persistent gaps, Latin America has experienced a steady decline in income inequality. This paper presents evidence of a trend reversal in labor income inequality, which is considered the main factor behind such a decline in income inequality across the region. The analysis shows that, while labor income inequality increased during the 1990s, with heterogeneous experiences across countries, it fell in a synchronized way across countries beginning in the early 2000s. This systematic decline was supported by an expansion in real hourly earnings among the bottom of the wage distribution and, to a lesser extent, the middle part of the earnings distribution, thus reducing upper and lower tail inequality. This trend reversal is explained by a lower dispersion of earnings among workers with observable different attributes and by a much less extensive dispersion of residual labor inequality. Regarding the earnings differentials among workers with observable different attributes, the analysis concludes that the decline in labor inequality in Latin America has been closely associated with a reduction in the college/primary education premium and in the urban-rural earnings gap, coupled with a steady drop in the high school/primary education premium, which accelerated markedly since the 2000s, as well as a reduction in the experience premium across all age groups.

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Americas

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Countries and territories:

Argentina

Bolivia (Plurinational State of)

Brazil

Chile

Colombia

Costa Rica

Dominican Republic

Ecuador

El Salvador

Guatemala

Honduras

Mexico

Panama

Paraguay

Peru

Uruguay

SDC’s vocational skills development activities: Evaluation 2011/2

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Document

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SDC’s vocational skills development activities: Evaluation 2011/2

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English

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english

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skpEng

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Bilateral organizations

The development agencies of many countries make skills development a pillar of their Official Development Assistance – from the perspective of education systems, employment promotion, poverty reduction, and private sector development. Documentation of their experience, evaluations and impact assessments, mission statements, and other knowledge products are made available through the Global KSP.

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skpBiOrg

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bilateral-organizations

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Training quality and relevance

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skpTrainQR

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training-quality-and-relevance

Knowledge Products:

Evaluation reports

Analytical assessments of technical cooperation programmes and national skills and employment policies, identifying success factors of different interventions in response to particular challenges in different circumstances.

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skpEvalRep

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evaluation-reports

Publication Date:

12 Apr 2016

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wcmstest4_171655.pdf

The report presents the findings of an external evaluation of the Swiss Agency for Development and Cooperation’s (SDC) Vocational Skills Development activities. The evaluation portfolio covered 10 projects and programmes in 9 countries (Albania, Bangladesh, Burkina Faso, Ecuador, Mali, Moldova, Nepal, Nicaragua, Peru). The report is structured along the lines of the OECD DAC Evaluation Criteria.

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TVET systems

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tvet-systems

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661

Vocational training

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vocational-training

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124

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Countries and territories:

Albania

Bangladesh

Bangladesh has a strong track record of growth and development, even in times of elevated global uncertainty. A robust demographic dividend, strong ready-made garment exports, resilient remittance inflows, and stable macroeconomic conditions have supported rapid economic growth over the past two decades. A strong recovery from the COVID-19 pandemic continued in FY22, although a recent surge in commodity prices has presented new headwinds.

Bangladesh reached lower-middle income status in 2015. It is on track to graduate from the UN’s Least Developed Countries list in 2026. Poverty declined from 43.5 percent in 1991 to 14.3 percent in 2016, based on the international poverty line of $1.90 a day (1).

Like many of its Asian neighbours, Bangladesh faces a major challenge trying to develop modern, employability skills for tens of millions of young women and men. It has a large informal sector, which accounts for 94.7 percent of the total employment in 2017 (2). Youth continue to be highly affected by the lack of opportunities, with the share of youth aged 15-24 not in employment, education or training (NEET), estimated at 27.8 percent in 2020 (3).

TVET has a huge role to play in equipping the vast young labour force of 15-29 years referred to as the country’s “demographic dividend” with employability skills and providing enhanced support services to ensure a better transition from school to work. TVET may also contribute to reducing poverty by providing employability skills, particularly to those who drop out of school early and to a large number of unemployed and underemployed adults.

Despite many reform initiatives by the government, the TVET sector needs further strengthening through reform of policies and systems in the labour market. Enhancing industry-relevance of TVET qualifications will furthermore require closer Government cooperation with the private sector. For one and a half decade, the ILO has worked closely with the Government of Bangladesh and its Social Partners to reform the TVET sector and to improve access for people to increase their skills and employability, in particular youth, women and people from other marginalized groups.

The impact of the COVID-19 pandemic had detrimental effects on the TVET sector, due to the nation-wide closure of all educational institutes for one and a half years, starting on 17 March 2020. Most students’ learning was effectively abolished for this duration, and learning and certification was only possible through limited online learning facilities in existence at the time. Only recently has the TVET returned to its prior activity level.

The ILO landmark programmes aim to strengthen and improve the environment for industry skills development, address the mismatch between the supply and demand for skills training, and drive the increased employability of millions of young women and men. ILO’s support to develop the skills system in Bangladesh has focused on skills system governance, development of skills policies and qualifications frameworks; delivery of quality skills training, expanding access to TVET, and involvement by the private sector.

Sources

(1) https://www.worldbank.org/en/country/bangladesh/overview

(2) https://ilostat.ilo.org/topics/informality/

(3) https://ilostat.ilo.org/topics/youth/

Country Assessment and Priority (CAP) – Bangladesh strategy for skills and lifelong learning (2022)

Situation Analysis of Bangladesh TVET Sector (2019) https://www.ilo.org/wcmsp5/groups/public/—asia/—ro-bangkok/—ilo-dhaka/documents/publication/wcms_735704.pdf_

Burkina Faso

Ecuador

Mali

Nepal

Peru

Republic of Moldova

Demand versus returns? Pro-poor targeting of business grants and vocational skills training

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Document

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															Demand versus returns? Pro-poor targeting of business grants and vocational skills training
													

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English

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english

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skpEng

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Information is gathered from other international organizations that promote skills development and the transition from education and training to work. The Interagency Group on Technical and Vocational Education and Training (IAG-TVET) was established in 2009 to share research findings, coordinate joint research endeavours, and improve collaboration among organizations working at the international and national levels.

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skpIntOrg

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international-organizations

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Monitoring and evaluation

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Measuring the outcomes of skills systems, policies and targeted programmes is essential in order to monitor and improve their effectiveness and relevance. Elements of sound assessment processes include: institutions to sustain feedback from employers and trainees; mechanisms to track labour market outcomes of training and systems of accountability that use this information; and, quantitative and qualitative labour market information and its dissemination to all stakeholders.

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skpPolPer

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monitoring-and-evaluation

Rural employment

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Eight out of 10 of the world’s working poor who live on US $1.25 per day live in rural areas, where many are caught in vulnerable employment, especially in agriculture.Flourishing rural areas are vital to regional and national development. Yet, rural economies tend to face a wide range of challenges that urban areas are more likely to overcome. These include access to transportation, sanitation and health services, and a consumer base in close proximity to support small and medium enterprise development. Women and men working in rural areas also face difficulties associated with a paucity of economic opportunities, under investment, poor infrastructure and public services, including education, and, in many cases, weak governance and underdeveloped markets.

Education, entrepreneurship, and physical and social infrastructure all play an important role in developing rural regions. Skills are central to improving employability and livelihood opportunities, reducing poverty, enhancing productivity and promoting environmentally sustainable development.

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skpREmpl

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rural-employment

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Research papers

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skpRPS

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research-papers

Publication Date:

09 May 2013

Open

wcmstest4_044838.pdf

Policy Research Working Paper 6389 Interventions aimed at increasing the income generating capacity of the poor, such as vocational training, micro-finance or business grants, are widespread in the developing world. How to target such interventions is an open question. Many programs are self-targeted, but if perceived returns differ from actual returns, those self-selecting to participate may not be those for whom the program is the most effective. The authors analyze an unusual experiment with very high take-up of business grants and vocational skills training, randomly assigned among nearly all households in selected poor rural communities in Nicaragua. On average, the interventions resulted in increased participation in non-agricultural employment and higher income from related activities. The paper investigates whether targeting could have resulted in higher returns by analyzing heterogeneity in impacts by stated baseline demand, prior participation in non-agricultural activities, and a wide range of complementary asset endowments.

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Poverty

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poverty

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148

Rural employment

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rural-employment

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670

Rural workers

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rural-workers

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637

Vocational training

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vocational-training

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124

Regions:

Americas

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Countries and territories:

Equipping youth who are harder to hire for the labor market

Type:

Document

Content Type:

Equipping youth who are harder to hire for the labor market

Language:

English

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english

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skpEng

Sources:

Other sources

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skpOSource

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other-sources

Topics:

Training quality and relevance

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skpTrainQR

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training-quality-and-relevance

Youth employability

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Globally, nearly 68 million young women and men are looking for and available for work, and an estimated 123 million young people are working but living in poverty. The number who are not in employment, education or training (NEET) stands at 267 million, a majority of whom are young women. Significantly, young people are three times as likely as adults (25 years and older) to be unemployed.

Skills development is a primary means of enabling young people to make a smooth transition to work. A comprehensive approach is required to integrate young women and men in the labour market, including relevant and quality skills training, labour market information, career guidance and employment services, recognition of prior learning, incorporating entrepreneurship with training and effective skills forecasting. Improved basic education and core work skills are particularly important to enable youth to engage in lifelong learning as well as transition to the labour market.

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skpYoEmp

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youth-employability

Knowledge Products:

Case studies and good practices

Case studies that document good practices and illustrate the benefits and lessons learnt of particular approaches or methods in real practice.

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skpCaseStdy

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case-studies-and-good-practices

Publication Date:

12 Nov 2012

Open

wcmstest4_023829.pdf

Learning Series No. 8 Entra 21 is an initiative of Multilateral Investment Fund of the Inter-American Development Bank, the International Youth Foundation (IYF) and USAID that was created in 2001 to improve the employability of disadvantaged youth in Latin America and the Caribbean and place them in decent jobs. IYF commissioned a study of five new groups projects funded under Phase II of entra21 to gain greater knowledge on how successful the projects were in recruiting more vulnerable youth, whether they became more employable, and which practices seem to have contributed to these youths’ ability to acquire new skills and secure employment or create their own micro-businesses. The study focused on projects in Ecuador, Nicaragua, Paraguay and Peru where the targeted youth face obstacles – having less education, living in rural areas, or having other personal or social characteristics – that make it harder to find decent work.

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Disadvantaged youth

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disadvantaged-youth

Identifier

663

Internships

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internships

Identifier

648

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