Nº 293 (January, 2022). Javier Alejo, Leonardo Gasparini, Gabriel Montes-Rojas & Walter Sosa-Escudero
“A decomposition method to evaluate the ‘paradox of progress’ with evidence for Argentina”.
The ‘paradox of progress’ is an empirical regularity that associates more education with larger income inequality. Two driving and competing factors behind this phenomenon are the convexity of the ‘Mincer equation’ (that links wages and education) and the heterogeneity in its returns, as captured by quantile regressions. We propose a joint least-squares and quantile regression statistical framework to derive a decomposition in order to evaluate the relative contribution of each explanation. The estimators are based on the ‘functional derivative’ approach. We apply the proposed decomposition strategy to the case of Argentina 1992 to 2015.
JEL codes: C68, Q5, O13, Q54
Suggested citation: Alejo, J., L. Gasparini, G. Montes-Rojas & W. Sosa-Escudero (2022). A decomposition method to evaluate the ‘paradox of progress’ with evidence for Argentina. CEDLAS Working Papers Nº 293, January, 2022, CEDLAS-FCE-Universidad Nacional de La Plata.