Where jE is a vector of dummies for each type of labor, γ is a vector associated with the labor dummies, is a vector of individual characteristics (age, age squared, genre, marital status), and are the estimated price-wage elasticities. is the price of the traded good g, and the error term. This varying coefficient model by Hsiao (1986), uses international prices as regressors, therefore avoiding possible endogeneity problems. Standard errors were corrected to account for clustering by skill intensity, since all individuals face the same prices. 'jzgjEβjgplogjμ
3 However, we are confident that this selection is a more accurate portrait of the socio-economic status of the country, especially after a recession that started in 1998 and ended in 2002.