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Wage Rigidity: Micro and Macro Evidence on Labor Market Adjustment in the Modern Sector

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  • Levy, Victor
  • Newman, John L

Abstract

Aggregate data on wages and employment may provide misleading indicators of labor market conditions. They may suggest inappropriate wage policies in the fact of the rising unemployment experienced in many developing countries during the 1980s. Such increases in unemployment are often attributed to wage rigidities. A cursory review of aggregate data for the modern sector in the Ivory Coast would support this view, suggesting that employment declined during the 1979-84 recession due to an increase in real wages. Examination of disaggregated data from two labor force censuses of the modern sector, however, shows that real wages declined for specified classes of labor. The work force was characterized by greater education, training, and experience; workers with a given level of attributes received a lower real wage by the end of the recession than before it. Despite this drop in real wages, employment in the modern sector declined. Copyright 1989 by Oxford University Press.

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Bibliographic Info

Article provided by World Bank Group in its journal World Bank Economic Review.

Volume (Year): 3 (1989)
Issue (Month): 1 (January)
Pages: 97-117

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Handle: RePEc:oup:wbecrv:v:3:y:1989:i:1:p:97-117

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Cited by:
  1. Horton, Susan & Kanbur, Ravi & Mazumdar, Dipak, 1991. "Labor markets in an era of adjustment : an overview," Policy Research Working Paper Series 694, The World Bank.
  2. Lesueur, Jean-Yves & Plane, Patrick, 1995. "Structures industrielles et stratégies salaire-emploi en Côte d’Ivoire," L'Actualité Economique, Société Canadienne de Science Economique, vol. 71(3), pages 291-307, septembre.
  3. Stevenson, Gail, 1992. "How public sector pay and employment affect labor markets : research issues," Policy Research Working Paper Series 944, The World Bank.
  4. Rama, Martin, 1998. "Wage misalignment in CFA countries: are labor market policies to blame?," Policy Research Working Paper Series 1873, The World Bank.

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