Peru: Employment and inequality trends

This chapter explores the relationship between skill-biased technological change (SBTC) and the inequality improvement observed in Peru during its trade liberalization episode (mid-2000s and 2010s). We use household survey data for the period 2004–18 to describe the evolution of labour force characteristics, their labour market returns, changes in occupational earnings, and the distribution of occupations. We account for workers’ productivity gains that may result from skill-biased technological change, by including occupation-specific routine-task content indices in Shapley and RIF decompositions of alternative inequality indicators. Although we find no evidence of SBTC effects on inequality, an additional investigation suggests that most of the slight improvement in inequality was driven by the commodity boom and its spillover effects through the construction sector.