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arXiv · 2112.03836

A decomposition method to evaluate the `paradox of progress' with evidence for Argentina

Javier Alejo·Leonardo Gasparini·Gabriel Montes-Rojas·Walter Sosa-Escudero
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Abstract

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.

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Javier Alejo, Leonardo Gasparini, Gabriel Montes-Rojas, Walter Sosa-Escudero. 2021-12-07. A decomposition method to evaluate the `paradox of progress' with evidence for Argentina. https://arxiv.org/abs/2112.03836

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