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Unemployment rate and the real wage behaviour: a neoclassical hint for the Colombian labour market adjustment

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  • Luis Arango
  • Carlos Posada

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.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics Letters.

Volume (Year): 9 (2002)
Issue (Month): 7 ()
Pages: 425-428

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Handle: RePEc:taf:apeclt:v:9:y:2002:i:7:p:425-428

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References

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  1. Luis Eduardo Arango T. & Carlos Esteban Posada, 2001. "El Desempleo En Colombia," BORRADORES DE ECONOMIA 002495, BANCO DE LA REPÚBLICA.
  2. Engle, Robert F & Granger, Clive W J, 1987. "Co-integration and Error Correction: Representation, Estimation, and Testing," Econometrica, Econometric Society, vol. 55(2), pages 251-76, March.
  3. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501.
  4. Perron, P, 1988. "The Great Crash, The Oil Price Shock And The Unit Root Hypothesis," Papers 338, Princeton, Department of Economics - Econometric Research Program.
  5. Bardsen, Gunnar, 1992. "Dynamic modeling of the demand for narrow money in Norway," Journal of Policy Modeling, Elsevier, vol. 14(3), pages 363-393, June.
  6. Balmaseda, Manuel & Dolado, Juan J & Lopez-Salido, J David, 2000. "The Dynamic Effects of Shocks to Labour Markets: Evidence from OECD Countries," Oxford Economic Papers, Oxford University Press, vol. 52(1), pages 3-23, January.
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Citations

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Cited by:
  1. Ana María Iregui & Jesús Otero, . "On the Dynamics of Unemployment in a Developing Economy: Colombia," Borradores de Economia 208, Banco de la Republica de Colombia.
  2. Miguel Urrutia & Mauricio Ruíz, 2010. "Ciento setenta años de salarios reales en Colombia," DOCUMENTOS CEDE 007090, UNIVERSIDAD DE LOS ANDES-CEDE.
  3. James Alm & Hugo López Castaño, 2002. "Payroll taxes in Colombia," WORKING PAPERS SERIES. DOCUMENTOS DE TRABAJO 003316, FEDESARROLLO.
  4. Ricardo Bonilla González & Jorge Iván González, 2006. "Bien-estar y macroeconomía 2002-2006: el crecimiento inequitativo no es sostenible," PUBLICACIONES - CID 002064, UN - RCE - CID.
  5. Jesús Otero & Luis Fernando Gamboa & Andrés García-Suaza, 2011. "An analysis of the relationship between wages in the public and private sector in colombia: a panel data approach," DOCUMENTOS DE TRABAJO 008738, UNIVERSIDAD DEL ROSARIO.
  6. Rodrigo Taborda & Juan Carlos Guataqui, 2003. "Firm level evidence of efficiency wages and labor turnover in Colombia's manufacturing industry," BORRADORES DE INVESTIGACIÓN 002729, UNIVERSIDAD DEL ROSARIO.
  7. Luis Eduardo Arango & Carlos Esteban Posada, . "La Tasa de Desempleo de Largo Plazo en Colombia," Borradores de Economia 388, Banco de la Republica de Colombia.
  8. Arroyo, José Santiago & Aponte, Elizabeth & Duque, Henry & Florez, Jaime, 2005. "Inflación y desempleo: ejercicio econométrico para Cali-Colombia
    [Inflation and Unemployment: econometric exercise for Cali-Colombia]
    ," MPRA Paper 15577, University Library of Munich, Germany, revised Jul 2005.
  9. Luis Eduardo Arango & Carlos Esteban Posada, . "The Time-Varying Long-Run Unemployment Rate: The Colombian Case," Borradores de Economia 389, Banco de la Republica de Colombia.
  10. Cecilia Albert Verdú & Carlos Giovanni González Espitia & Jhon James Mora Rodríguez, 2013. "Determinantes de la demanda de educación universitaria en Colombia, 1980-2010," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 15(29), pages 169-194, July-Dece.

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