Unemployment Rate and the Real Wage Behaviour: A Neoclassical Hint for the Colombian Labour Market Adjustment

Luis Eduardo Arango Thomas () and Carlos Esteban Posada

Applied Economics Letters, 2002, vol. 9, issue 7, pages 425-28

Abstract: The Colombian urban unemployment rate has grown dramatically over the last six years. At the same time the real wage also had a sharp increase. The empirical evidence supports the hypothesis that an exogenous increase in the real wage was a cause of the unemployment growth. The long-run elasticity suggests a 1% increase of the real wage index increases unemployment rate something between 0.7% and 1.0%. Therefore it seems necessary that the real wage goes back to its equilibrium path for the reduction of the unemployment rate to the natural level. Copyright 2002 by Taylor and Francis Group

Date: 2002
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Working Paper: UNEMPLOYMENT RATE AND THE REAL WAGE BEHAVIOR: A NEOCLASSICAL HINT FOR THE COLOMBIAN LABOR MARKET ADJUSTMENT (2001)
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