Evolving Wage Cyclicality in Latin America

Luca Gambetti and Julian Messina

No 10657, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: 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 are highly pro-cyclical during the 1980s and early 1990s, a period characterized by high inflation. As inflation declined wages became less pro-cyclical, 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.

Keywords: downward wage rigidity; indexation; real wage cyclicality; vector autoregression; time varying coefficients; Bayesian estimation (search for similar items in EconPapers)
JEL-codes: E24 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2017-03
New Economics Papers: this item is included in nep-his, nep-lam, nep-lma and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in: World Bank Economic Review, 2018, (323), 709-726.

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Related works:
Journal Article: Evolving Wage Cyclicality in Latin America (2018)
Working Paper: Evolving Wage Cyclicality in Latin America (2016)
Working Paper: Evolving wage cyclicality in Latin America (2014)
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