Mexico

This chapter focuses on income inequality in Mexico, which increased between 1989 and 1994. Between 1994 and 2006, inequality declined; between 2006–14, inequality was again on the rise. The authors apply decomposition techniques to analyse the proximate determinants of labour income inequality and fiscal incidence analysis to estimate the first-order effects of taxes and social spending on the distribution of income. The key component that underlies the ‘rise–decline–rise again’ pattern was the evolution of returns to skills. In addition, while changes in fiscal policy in the 1990s were progressive and pro-poor, the redistributive effect has declined significantly since 2010, as transfers have become less progressive and net indirect taxes have increased.

Language skills and labour market returns

Increased migration, global trade and the introduction of digital labour platforms call for a better understanding of the mechanisms that can enhance economic and labour market outcomes in the face of increasing disparities in culture, language and identity. The article contributes to the literature on labour market returns on language skills, which is very heterogeneous and context-specific, by carrying out a systematic review of that literature. The meta-regression analysis estimates the returns on language skills that come from socio-economic, institutional and ethnolinguistic factors along with controls for the study design. The meta-regression results for the labour market returns that stem from knowledge of the local state language, a significant local minority language or the business language provide evidence that knowing the more influential language is associated with higher labour market rewards. Linguistic diversity has a negative effect on the returns to skills in the business language but increases the returns to the local state language. Urbanisation has a negative, though quantitatively modest, effect on returns to language skills in the business language, whilst the GDP level increases the returns to minority language skills and unemployment increases returns to skills in the business language and the local state language.

Employers’ preferences for IT-retrainees: evidence from a discrete choice experiment

Purpose The purpose of this paper is to present the results of a discrete choice experiment (DCE) on the competencies of potential information technology (IT)-retrainees. The results give insights in the monetary value and relative returns to both soft and hard skills. Design/methodology/approach The authors apply a DCE in which the authors propose seven pairs of hypothetical candidates to employers based in the municipality of Amsterdam, the Netherlands. These hypothetical candidates differ on six observable skill attributes and have different starting wages. The authors use the inference from the DCE to calculate the marginal rates of substitution (MRS). The MRS gives an indication of the monetary value of each skill attribute. Findings Employers prefer a candidate who possesses a degree in an exact field over a similar candidate from another discipline. Programming experience from previous jobs is the most highly valued characteristic for an IT-retrainee. Employers would pay a candidate with basic programming experience a 53 percent higher starting wage. The most high-valued soft skill is listening skills, for which employers are willing to pay a 46 percent higher wage. The results of this paper show that both hard and soft skills are important, but not all soft skills are equally important. Originality/value The results on the returns to skills provide guidelines to tailor IT training and retraining programs to the needs of the business environment. A key strength of this paper is that the authors have information on the preference orderings for different skills and kinds of experience.