Documento de Trabajo, Instituto de Investigaciones Socio-Económicas, Universidad Católica Boliviana 02/99
This paper uses Bolivian household survey data to show that there are large and persistent wage differentials between Bolivian cities. Generally, workers in the tropical lowlands tend to earn about 50% more per hour than workers with similar characteristics in the temperate highlands. Temperature differences was shown to be the most effective variable in explaining such differences, but telephone density also seemed to have an impact on labor productivity and wages. The study suggests that measures to create a more pleasant indoor climate in the highland cities may increase worker productivity and thereby wages and living standards for those who are currently disadvantaged. Investment in communication infrastructure may increase productivity in all of Bolivia.