Is there a paradox of progress in Ecuador? Exploring the contingent effect of higher education on labor income inequality in 2009–2022

This study explores the relationship between higher education and labour income inequality in Ecuador from 2009 to 2022. Using the recentered influence function (RIF) approach and data from the Encuesta Nacional de Empleo, Desempleo y Subempleo (ENEMDU), the analysis decomposes inequality into structural and compositional effects. The findings reveal a ‘paradox of progress’, where higher education correlates with increased income inequality, primarily driven by the compositional effects such as unequal access and labour market segmentation, while structural effects, like returns to education, play a smaller role. The study identifies Ecuador’s economic model, which restricts innovation in STEM fields and productivity growth, as a key factor behind this trend. Addressing these imbalances requires restructuring workforce remuneration systems. By highlighting structural constraints on inequality, including the impact of crises like the Covid-19 pandemic, this research contributes to understanding education and inequality in Latin America, with specific implications for Ecuador’s policy landscape.