Inequality, segregation and the Chilean labour market

Abstract

The aim of this paper is to shed some light on the dynamics of the Chilean labour market over the last thirty years or so. We investigate the relations between wage inequality and the level of segregation which characterise the Chilean society as a whole. We show the presence of high segregation in the labour market, and we argue in favour of the existence of a casual nexus between segregation and wage inequality. We test our hypothesis calculating a segregation index and testing causality, in the Granger sense, with a Gini index over the period 1967 – 1996. We also measure the magnitude of the impact of segregation on inequality through OLS estimations.