Should I Stay or Should I Go? Career Choices for Young Workers in Latin America

Abstract

This paper presents the first estimates of the returns to formal labor market experience and tenure in a developing country context. We take advantage of rich matched employer-employee data from Brazil and Chile, exploiting job displacement as a source of identification. We find positive returns to both dimensions in these countries, with larger returns to tenure in Brazil and larger returns to experience in Chile. Our findings suggest the more rigid Brazilian labor legislation may encourage firms to invest in young workers' specific skills. Chile's institutions, on the contrary, might promote the acquisition of general skills. (JEL J24, J31, M50)

Differences in On-the-Job Learning Across Firms

“…Lastly, while the returns to experiences in Veneto exhibit less het-20 Understanding why returns differ across these two economies is beyond the scope of this paper. Dustmann and Pereira (2008) discuss potential factors driving differential returns to experience in Germany and the UK, Rucci et al (2020) do so across Brazil and Chile. Lagakos et al (2018) and Donovan et al (2021) document a positive cross-country correlation between returns to potential experience and GDP per capita.…”

“…By carrying out our empirical strategy in Rio de Janeiro and in Veneto, we also contribute to previous work comparing labor markets in different countries (e.g Dustmann and Pereira, 2008;Lagakos et al, 2018;Rucci et al, 2020;Bonhomme et al, 2020;Donovan et al, 2021)Bonhomme et al (2019),…”

Differences in On-the-Job Learning Across Firms

“…By carrying out our empirical strategy in Rio de Janeiro and in Veneto, we also contribute to previous work comparing labor markets in different countries (e.g Dustmann and Pereira, 2008;Lagakos et al, 2018;Rucci et al, 2020;Bonhomme et al, 2020;Donovan et al, 2021)Bonhomme et al (2019),…”