Manufacturing wage differentials in Venezuela and Uruguay
by Juan J. Buttari
The primary objective of this chapter is to measure wage differentials in nine industries of the Venezuelan manufacturing sector and in four manufacturing industries in Uruguay. It also attempts to (a) test the consistency of the results with various hypotheses on the nature and type of wage differentials in developing countries, and (b) determine the relative ability of various variables to explain the dispersion of wage rates.
The chapter contains three main sections. Following a few methodological comments in this introduction, the first and second sections present and discuss wage differentials in the Venezuelan and Uruguayan manufacturing sectors, respectively. The third section compares aspects of the labor markets in both countries and suggests policy guidelines.
The methodology used is similar to that employed in previous chapters measuring intercountry and national differentials. The measurement of the wage structure is accomplished on two levels: in the first, differentials not adjusted for worker's skills are measured; in the second, regression methods are used to adjust for these skills. Minimum wages are used instead of average rates. The former are preferable because there are skill grades in any given occupation. In developing countries "the distribution of skills . . . is probably skewed heavily to the low side within any classification."
NOTE: The author is grateful to colleagues on the staffs of the Instituto de Investigaciones Económicas, Universidad Católica Andrés Bello ( Venezuela), and of the Facultad de Ciencias Económicas y de Administración, Universidad de la República ( Uruguay), for their efforts in collecting and processing the data used in this study. These tasks were supervised in Venezuela by Mr. Jose Ignacio Rodríguez assisted by Mr. Luis Lange and, in Uruguay, by Mr. Raul Vigorito. Messrs. Denisard Alves, John R. Eriksson, Robert Ferber, Stephan MacGaughey, Joseph Grunwald, Ricardo Martínez, Philip Musgrove, Jorge Salazar-Carrillo, Joseph Tryon, and an anonymous referee offered helpful comments. Mr. Jeffrey Schott and Miss Lois Dublin provided needed editorial assistance. Mr. Schott also provided valuable research assistance. The author is indebted to Mr. Joseph Tu and Ms. Marcia Mason for their assistance in the use of various computer programs.