Wage Inequality in Latin America: Understanding the Past to Prepare for the Future by Julián Messina & Joana Silva

Author:Julián Messina & Joana Silva
Language: eng
Format: epub

Source: Camacho, Messina, and Uribe (2016).

Note:. “Newly created” higher education programs are those whose first graduate finished school in 2002 or after.

• Effect on test scores. The exit test scores of graduates from traditional programs are 0.32 standard deviations higher than the scores of graduates from new programs (red bar). However, those differences virtually disappear once we consider that students from disadvantaged backgrounds are likelier to attend the new programs and that these new programs are concentrated in degrees with low returns.7 The impact of attending a new program declines to −0.06 standard deviations after controlling for a full set of student characteristics including socioeconomic background, the high school attended, and the standardized exam scores upon entry into higher education (blue bar). Adding a full set of higher education institution characteristics (most notably, the area of study) further reduces the impact to −0.04 (yellow bar).

• Effect on entry wage. Graduates from new programs earn, on average, 14 percent less in their first jobs than graduates of traditional programs. However, the difference declines to 3 percent once graduates with similar characteristics who graduate from the same area of studies are compared.

• Effect on formal employment. The probability of being a formal worker is virtually the same between the graduates of old and new programs once students from similar backgrounds and attending similar areas of study are compared.

We conclude that the recent expansion in the demand for higher education in Colombia does not seem to have been accompanied by a degraded supply. Once we compare similar students in similar areas of study, the returns of attending a newly created program do not differ much from the returns of attending traditional, well-established programs. This is perhaps surprising, considering the rapid expansion of Colombia’s higher education system. More than 50 percent of the 2011 graduates graduated from a program introduced during the previous decade.

However, Colombia was an early adopter of quality controls in the higher education system. Starting in 2003, minimum quality standards were required to set up a new program. In addition, a certification of excellence was put in place. Camacho, Messina, and Uribe (2016) provide further evidence that these accreditation systems were effective. This, in turn, should put caution into extrapolating these results to other countries in the region, particularly those countries where quality controls are not in place. More research is needed to understand how the quality of higher education institutions has evolved in other countries of the region.

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