Unemployment Rate and the Real Wage Behavoir: A Neoclassical Hint for the Colombian Labor Market Adjustment

Luis Arango Thomas and Carlos Posada

Borradores de Economia from Banco de la Republica de Colombia

Abstract: The colombian urban unemployment rate grew 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 suggest that one percent increase of the real wage index increases unemployment rate something between 0.7 and 1.0 percent. Therefore it seems necessary that real wage comes back to its equilibrium path for the reduction of the unemployment rate to the natural level.

Keywords: Unemployment rate; real wage; cointegration; long-run elasticities. (search for similar items in EconPapers)
JEL-codes: E24 J30 (search for similar items in EconPapers)
Date: 2001-06
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Citations: View citations in EconPapers (9)

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https://doi.org/10.32468/be.180 (application/pdf)

Related works:
Working Paper: UNEMPLOYMENT RATE AND THE REAL WAGE BEHAVIOR: A NEOCLASSICAL HINT FOR THE COLOMBIAN LABOR MARKET ADJUSTMENT (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:bdr:borrec:180

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