UNTANGLED researchers contributed to a book on the main drivers of earnings inequality in low and middle-income countries. The publication fills the gap in the literature on labour-market polarisation in developing countries by studying the role of skills, institutions, and occupational tasks in the evolution of earnings inequality.
Tasks, Skills, and Institutions: The Changing Nature of Work and Inequality was co-edited by Piotr Lewandowski of the Institute for Structural Research (IBS) and Kunal Sen, a member of the Project Advisory Board. It also features a chapter on South Africa by a team from the Development Policy Research Unit (DPRU), led by Haroon Bhorat.
The book analyses 11 developing countries in Africa, Asia, and Latin America, testing the extent to which changes in jobs and wages polarise work and fuel inequality.
The country case studies demonstrate that work and earnings polarisation has been less common in low- and middle-income countries than in high-income ones. In developing countries, technological change does not have such strong effects on task transformation, so job deroutinisation is slower. Moreover, rising premia associated with higher education contribute to inequality.
On the other hand, labour market institutions such as the minimum wage have played an important role in limiting earnings inequality in developing countries. The authors argue that the importance of these institutions will increase when technology adoption accelerates and returns on skills rise further.
Tasks, Skills, and Institutions: The Changing Nature of Work and Inequality, edited by Carlos Gradín, Piotr Lewandowski, Simone Schotte, Kunal Sen, Oxford University Press, UNU-WIDER (2023).
You can access the publication here.