Abstract

Standard economic theories of wage inequality focus on the factor-biased nature of technological change and globalization. This paper examines the long-run development of industrial wage inequality in Latin America from a global comparative perspective. We find that wage inequality was comparatively modest during the first half of the twentieth century, but rising much faster during the postwar era than in other industrial countries. In-depth analyses of wage inequality trends in Argentina, Brazil, and Chile confirm this pattern, but also reveal notable country peculiarities. In Argentina and Chile, trend breaks coincided with large political-institutional shocks while in Brazil, wage inequality increased unabated under the wage regulation policies of successive post-war administrations. We argue that without taking national policies with respect to education and the labor market into account, economic theory cannot explain “Latin American” patterns of wage inequality.