Reconciling wage equality and global competition: the political economy of skills in Uruguay

This paper examines how skill formation shapes wage differentiation in solidaristic labor-markets. Using panel data from Uruguay, we show that skill formation is associated with moderate increases in wage differentiation, indicating that coordinated wage-setting institutions do not eliminate distributive pressures but constrain their magnitude. Results further reveal that treated sectors were already undergoing distributive transformations, suggesting that attempts for skill upgrading are embedded within broader processes rather than constituting exogenous interventions. Finally, results show limited evidence that international insertion, including GVC-integration, systematically structures distributive outcomes, contributing to bridge skill policy, industrial policy, and international integration in emerging economies.