Changes in Returns to Education in Latin America: The Role of Demand and

Mexico, the authors document rends in men's returns to education during the 1980s and the 1990s and estimate the role of supply and demand factors in explaining the changes in skill premia. They propose a model of demand for skills with three produc-tion inputs, corresponding to workers with primary-, secondary-, and university-level education. Further, the authors demonstrate that an unprecedented rise in the supply of workers having completed secondary-level education depressed their wages relative to workers with primary-level education throughout Latin America. This supply shift was compounded by a generalized shift in the demand for workers with tertiary education. r 1 1 he rising wage premium for skilled work--■ ■ ers since (at least) the 1980s is a well documented fact in many developed coun-tries. Much less is known about the evolution of skill premia in developing countries and, in particular, about the extent o which changes have occurred because of shifts in the relative demand for or the relative supply of workers with different levels of completed education. For a variety of reasons, understanding the determinants ofrelative wage growth in Latin America is important. First, Latin America is the region with the most unequal distribution of wealth in the world. In the 1990s, the Gini coefficient, a widely used measure of inequal-ity, was between 15 and 19 points higher i