Are science students missing in South America? Productivity and the labor market say yes

During 2002–2011, inequality in South American decreased substantially, in large part because the wage gap between unskilled and skilled professionals narrowed. A feasible generalized least squares model shows that skilled workers contribute less to productivity and thus receive smaller wages increases. We study if this outcome is because of a mismatch between labor market needs and knowledge of professionals with higher education. We use the cluster methodology applied by Izquierdo, et al. (2019) to show how the number of publications in science, as a proxy for the number of science professionals, affects productivity. The results demonstrate that the lack of science professionals is the main constraint on productivity in South American countries. These results help explain the contradiction between high demand for skilled workers, which firms fail to meet, and low compensation among employees with higher education.