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1. Minimum Wages and Skill Premiums: Evidence for Latin America

Author:
Lucía Ramírez Leira, Octavio Bertín, and Leonardo Gasparini
Publication Date:
03-2025
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
This paper analyzes the effect of the minimum wage on skill premiums in Latin America over the period 1997–2019. The canonical labor market model is extended to include the role of the minimum wage, following the approach proposed by Vogel (2023). Skill premiums are estimated through Two-Way Fixed Effects (TWFE) regressions using harmonized household survey microdata from 14 Latin American countries. Results suggest that increases in the minimum wage are associated with reductions in the skill premium between workers with and without higher education, but do not appear to have a significant effect on the gap between workers with medium and low levels of education. The largest effect of the minimum wage is observed for workers with higher levels of labor market experience. These findings contribute to recent evidence highlighting the role of labor institutions as one of the main drivers of the reduction in inequality in Latin America since the early 2000s.
Topic:
Economics, Inequality, Skilled Labor, Minimum Wage, and Wages
Political Geography:
Latin America

2. Making industrial policy work: a case study on the European Battery Alliance Academy

Author:
Conor McCaffrey and Niclas Poitiers
Publication Date:
01-2024
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
The transition from cars powered by the internal combustion engine to vehicles powered by electric batteries implies a fundamental shift in the types of skills required by the automotive industry. However, the industry faces significant problems in finding suitable workers. Surveys show that the lack of skilled labour is seen by firms as a problem of similar magnitude to high energy costs. Against the background a general skills shortage in the European Union, the shortage of skilled labour represents a major impediment to the development of a European battery industry. The European Battery Alliance Academy is the main component of the EU’s strategy for tackling this problem. It develops training courses and materials to assist local training providers, and serves as a blueprint for skills policies in other industries. However, given the scale of the challenge, it represents more a symbolic than a substantive answer to the challenge. More should be done. The limited powers of the EU in labour market policies hold up a union-wide solution. In the short term, the training programmes developed by the European Battery Alliance Academy* could more explicitly target demographics that are underserved by private training providers. In the medium term, the EU should rethink its labour market competences in order to develop a social pillar to underpin the European green transition.
Topic:
Industrial Policy, European Union, Labor Market, Skilled Labor, and Workforce
Political Geography:
Europe

3. Regional Amenities, Services Offshoring, and Skilled Employment in the Republic of Korea

Author:
Ju Hyun Pyun
Publication Date:
05-2024
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This study empirically examines the effect of services offshoring and regional amenities on the composition of skilled employment for services firms. Analysing Korean firm-level data spanning from 2006 to 2019, we find that services offshoring, characterised by the import of services intermediate inputs, correlates with an increase in the proportion of skilled workers within firms. Additionally, the effects of this shift are nuanced based on different skill levels: services offshoring leads to an increase in the share of permanent headquarters workers to total workers. However, it does not affect the share of high-end skilled workers, such as headquarters’ share of management and research and development (R&D) workers. Moreover, regional amenities promote the positive effect of services offshoring on permanent headquarters workers’ shares. Lastly, the positive effect of offshoring on demand for high-end skilled workers in headquarters is significantly greater for firms with higher R&D intensity.
Topic:
Employment, Human Capital, Services, Skilled Labor, Research and Development, and Offshoring
Political Geography:
Asia and South Korea

4. A Win-Win: Migration Partnerships for an Aging EU Workforce

Author:
Helen Dempster, Pete Baker, and Samuel Huckstep
Publication Date:
09-2024
Content Type:
Policy Brief
Institution:
Center for Global Development (CGD)
Abstract:
European Union (EU) member states have ambitious green transition targets and healthcare strategies in place, requiring the relevant sectors to expand. Yet these sectors are already suffering from large workforce shortages. Expanding skilled migration from third countries to the EU to meet these shortages risks stripping countries of origin of the talent they need for their own goals. Any skilled migration therefore needs to be pursued within partnerships which prioritise meaningful benefits to the country of origin to combat “brain drain”, a “win-win” policy solution. This can be done through the Global Skill Partnership model, wherein the country of destination pays for the training of workers within the country of origin, some of whom migrate. While migration is a member state competence, there is real opportunity for the incoming European Commission to make a global difference in three ways: (1) expand funding for pilot projects; (2) support the development of new partnerships; and (3) be a positive voice for the role of skilled migration.
Topic:
Migration, European Union, Skilled Labor, European Commission, and Green Transition
Political Geography:
Global Focus