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The Dynamics of Earnings in Chile

Author

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  • Cristóbal Huneeus
  • Andrea Repetto
Abstract
This paper provides an empirical analysis of individual earnings using data from the Encuesta Suplementaria de Ingresos. We find that the predictable component of income is hump-shaped over the life-cycle, and that there are strong education effects. The unpredictable component of income can be described by a very persistent permanent shock and a transitory shock. Our estimates are built from a panel of cohorts, so we use US data from the PSID to provide a magnitude for the underestimation of the estimated variances. Surprisingly, we find that the variance of the permanent shock is almost 4 times smaller in Chile than in the US, a result, perhaps, of the relative rigidity of the Chilean labor market.

Suggested Citation

  • Cristóbal Huneeus & Andrea Repetto, 2004. "The Dynamics of Earnings in Chile," Documentos de Trabajo 183, Centro de Economía Aplicada, Universidad de Chile.
    • Handle: RePEc:edj:ceauch:183
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    References listed on IDEAS

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    Cited by:

    1. Sánchez Martín, A. & Jiménez Martín, S. & Robalino, D. & Todeschini, F., 2012. "Labor Income and the Design of Default Portfolios in Mandatory Pension Systems: An Application to Chile," Working Papers 2012-04, FEDEA.
    2. Jorge E. Restrepo & Andrea Tokman R., 2005. "Labor Markets and Institutions: An Overview," Central Banking, Analysis, and Economic Policies Book Series, in: Jorge Restrepo & Andrea Tokman R. & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Edi (ed.),Labor Markets and Institutions, edition 1, volume 8, chapter 1, pages 001-016, Central Bank of Chile.
    3. Hugo Ñopo & Giorgina Pizzolitto & José Cuesta, 2007. "Usando pseudopaneles para medir la movilidad del ingreso en América," Research Department Publications 4558, Inter-American Development Bank, Research Department.
    4. Paulina Granados Z., 2004. "Income Function of Chilean Households: Life Cicle and Persistence of Shocks," Working Papers Central Bank of Chile 257, Central Bank of Chile.
    5. Carlos Madeira, 2015. "Identification of Earning Dynamics using Rotating Samples over Short Periods: The Case of Chile," Working Papers Central Bank of Chile 754, Central Bank of Chile.
    6. Jose Cuesta & Hugo Ñopo & Georgina Pizzolitto, 2011. "Using Pseudo‐Panels To Measure Income Mobility In Latin America," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 57(2), pages 224-246, June.
    7. Paulina Granados Z., 2004. "Chilean Household Income Function: Life Cycle and Persistence of Shocks," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 7(1), pages 51-89, April.

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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D89 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Other
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures

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