Impact of Occupational Change and Educational Rise on Age of Peak Earnings and Retirement Age in Latin America

Bernardo L. Queiroz, Cedeplar, UFMG

The main objective of the paper is to investigate how changes in occupational composition and age-earnings profiles are related to different trends in the elderly labor force participation and retirement patterns in Brazil and Mexico. Our main working hypothesis is that these changes caused a rapid shift towards an older age-earnings profile and at the same time a trend towards early withdrawal from the labor force. Evidence on age-earnings schedules for industrialized countries in the 19th century and up until the 1960 suggests that workers attained the highest earnings already in the 30s, and sometimes earlier. Since then, peak earnings have shifted towards older ages and by the 2000s, wages peak around age 50. Using Brazil and Mexico as an example, where industrializiation went much quicker, we find that the later peak in age-earnings schedules can to a significant extent be explained by educational and occupational change.