Evolving wage cyclicality in Latin America

Luca Gambetti; Julián Messina

doi:https://doi.org/10.1093/wber/lhw046

Evolving wage cyclicality in Latin America

Luca Gambetti, Julián Messina

Research output: Contribution to journal › Article › Research › peer-review

1 Citation (Scopus)

Abstract

© The Author(s) 2018. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / THE WORLD BANK. All rights reserved. This paper examines the evolution of the cyclicality of real wages and employment in four Latin American economies, Brazil, Chile, Colombia, and Mexico, during the period 1980-2010.Wages were highly procyclical during the 1980s and early 1990s, a period characterized by high inflation. As inflation declined wages became less procyclical, a feature that is consistent with emerging downward wage rigidities in a low inflation environment. Compositional effects associated with changes in labor participation along the business cycle appear to matter less for estimates of wage cyclicality than in developed economies.

Original language	English
Pages (from-to)	709-726
Journal	World Bank Economic Review
Volume	32
DOIs	https://doi.org/10.1093/wber/lhw046
Publication status	Published - 1 Jan 2018

Keywords

Bayesian estimation
Downward wage rigidity
Indexation
Real wage cyclicality
Time varying coefficients
Vector autoregression

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https://doi.org/10.1093/wber/lhw046

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title = "Evolving wage cyclicality in Latin America",

abstract = "{\textcopyright} The Author(s) 2018. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / THE WORLD BANK. All rights reserved. This paper examines the evolution of the cyclicality of real wages and employment in four Latin American economies, Brazil, Chile, Colombia, and Mexico, during the period 1980-2010.Wages were highly procyclical during the 1980s and early 1990s, a period characterized by high inflation. As inflation declined wages became less procyclical, a feature that is consistent with emerging downward wage rigidities in a low inflation environment. Compositional effects associated with changes in labor participation along the business cycle appear to matter less for estimates of wage cyclicality than in developed economies.",

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N2 - © The Author(s) 2018. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / THE WORLD BANK. All rights reserved. This paper examines the evolution of the cyclicality of real wages and employment in four Latin American economies, Brazil, Chile, Colombia, and Mexico, during the period 1980-2010.Wages were highly procyclical during the 1980s and early 1990s, a period characterized by high inflation. As inflation declined wages became less procyclical, a feature that is consistent with emerging downward wage rigidities in a low inflation environment. Compositional effects associated with changes in labor participation along the business cycle appear to matter less for estimates of wage cyclicality than in developed economies.

AB - © The Author(s) 2018. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / THE WORLD BANK. All rights reserved. This paper examines the evolution of the cyclicality of real wages and employment in four Latin American economies, Brazil, Chile, Colombia, and Mexico, during the period 1980-2010.Wages were highly procyclical during the 1980s and early 1990s, a period characterized by high inflation. As inflation declined wages became less procyclical, a feature that is consistent with emerging downward wage rigidities in a low inflation environment. Compositional effects associated with changes in labor participation along the business cycle appear to matter less for estimates of wage cyclicality than in developed economies.

KW - Bayesian estimation

KW - Downward wage rigidity

KW - Indexation

KW - Real wage cyclicality

KW - Time varying coefficients

KW - Vector autoregression

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VL - 32

SP - 709

EP - 726

JO - World Bank Economic Review

JF - World Bank Economic Review

ER -

Evolving wage cyclicality in Latin America

Abstract

Keywords

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