Wage differentials, microenterprises, and the household evidence from Latin America
Description
This dissertation contains three independent essays on labor market issues that are most relevant for Latin American countries from a development economics standpoint. The first essay is about microenterprises' informality. Our research question is whether access to physical and human capital play a role in the decision of a microentrepreneur to become formal. Results show that human and physical capital are essential in explaining institutional participation. Thus, the transition towards formality would only be natural for firms with access to credit, education, and training The second essay studies the relationship between women's bargaining power in the household and female labor supply in Chile and Nicaragua. Most cooperative and non-cooperative bargaining models incorporate bargaining power as an exogenous factor in the determination of female labor force participation and number of hours worked. The objective of this essay is to establish whether bargaining power is an exogenous or endogenous determinant of labor force participation and labor supply in a specific theoretical and empirical context. Our findings indicate that appropriate treatment of simultaneous causality is essential to study the relationship among bargaining power, labor force participation, and labor supply The purpose of the last essay is to study the impact of occupational choice on measures of inter-sectoral wage differentials in the context of urban Mexico, employing individual survey data. The existence of wide inter-sectoral wage differentials unexplained by human capital characteristics has important implications both for labor economics theory and labor markets policy. One weakness of current estimations of inter-sectoral wage differentials is the lack of appropriate consideration of occupational choice. We propose to use a model of earnings and occupational choice, which employs a multinomial logit specification to predict the probabilities of having selected an occupation for workers who are already in the labor force. We estimate inter-sectoral wage differentials using the traditional least squares regression with dummies as a benchmark. In general the interval of wage variation explained by inter-sectoral wage gaps is reduced when using selectivity corrected log-wage regressions for each occupation