Citation:
Abstract:
This paper asks how do the differences in income, fertility, participation and education come about. The central argument we develop is that the differences within and between countries are to a large extent related to a set of family choices that are strongly influenced by the potential returns to female education in the labor market. Differences in income, fertility, participation and human capital investment are not solely affected by personal characteristics. There are underlying conditions in the Latin American economies that are greater than individuals and families themselves and that shape family decisions. Some of them come from the functioning of labor markets, technological progress, factor endowments, and other factors at the country level. For instance, when the returns to education in the labor market are less differentiated, so that uneducated workers receive relative greater pay compared to educated workers, the differences in fertility, participation and the education of the new generations between poor and rich, are smaller. Therefore, what matters the most for these choices are the returns to unskilled labor. This has strong implications for income inequality.