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Political-Economic Regime and the Wage Curve: Evidence from Chile, 1957-96

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  • Janine Berg
  • Dante Contreras

Abstract

This paper tests whether a wage curve—a negative relationship between the level of unemployment and the level of pay—existed in Chile during 1957-96. The analysis is divided into two periods. For 1957-73, during inward-led development, we reject the existence of a wage curve. For 1974-96, when the economy opened, state-run industries were privatised and labour rights weakened, we find a wage curve of -0.08. Based on this finding we conclude that the unemployment-pay elasticity in the post-reform period is similar to the -0.07 to -0.10 wage curve found in other western, capitalist countries. Disaggregating the analysis by group, we find that women, non-university educated workers and public sector workers have suffered more from unemployment. Yet informal sector workers have not experienced pay drops as a result of unemployment, contradicting the hypothesis that the informal sector acts as a buffer during economic downturns.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal International Review of Applied Economics.

Volume (Year): 18 (2004)
Issue (Month): 2 ()
Pages: 151-165

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Handle: RePEc:taf:irapec:v:18:y:2004:i:2:p:151-165

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Keywords: Wage curve; unemployment; inequality; Chile;

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References

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  1. David Card, 1995. "The Wage Curve: A Review," Working Papers 722, Princeton University, Department of Economics, Industrial Relations Section..
  2. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-42, March.
  3. David G. Blanchflower & Andrew J. Oswald, 1995. "The Wage Curve," MIT Press Books, The MIT Press, edition 1, volume 1, number 026202375x, December.
  4. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August.
  5. repec:fth:prinin:343 is not listed on IDEAS
  6. Kennedy, Steven & Borland, Jeff, 2000. "A Wage Curve for Australia?," Oxford Economic Papers, Oxford University Press, vol. 52(4), pages 774-803, October.
  7. Baltagi, Badi H. & Blien, Uwe, 1998. "The German wage curve: evidence from the IAB employment sample," Economics Letters, Elsevier, vol. 61(2), pages 135-142, November.
  8. Edwards, Sebastian & Edwards, Alejandra Cox, 1991. "Monetarism and Liberalization," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226184890.
  9. David G. Blanchflower & Andrew J. Oswald, 1995. "An Introduction to the Wage Curve," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 153-167, Summer.
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Cited by:
  1. Badi H. Baltagi & Yusuf Soner Baskaya & Timur Hulagu, 2012. "How Different Are the Wage Curves for Formal and Informal Workers? Evidence from Turkey," Center for Policy Research Working Papers 145, Center for Policy Research, Maxwell School, Syracuse University.
  2. David G. Blanchflower & Andrew J. Oswald, 2005. "The Wage Curve Reloaded," NBER Working Papers 11338, National Bureau of Economic Research, Inc.
  3. Deller, Steven C., 2009. "Wages, Rent, Unemployment and Amenities," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 39(2).
  4. Richard B. Freeman, 2009. "Labor Regulations, Unions, and Social Protection in Developing Countries: Market distortions or Efficient Institutions?," NBER Working Papers 14789, National Bureau of Economic Research, Inc.
  5. Hector Elias Gutierrez Rufrancos, 2012. "The Mexican Wage Curve 2000-2003: A Quantile Analysis," Working Paper Series 3412, Department of Economics, University of Sussex.
  6. Ramos, Raul & Duque, Juan C. & Surinach, Jordi, 2010. "Is the wage curve formal or informal? Evidence for Colombia," Economics Letters, Elsevier, vol. 109(2), pages 63-65, November.
  7. Marisa Carla Bucheli Anaya & Cecilia González Rodríguez-Villamil, 2012. "An estimation of the wage curve for Uruguay," REVISTA CUADERNOS DE ECONOMÍA, UN - RCE - CID.
  8. David Castro Lugo, 2006. "Curva salarial: una aplicación para el caso de México, 1993-2002," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 21(2), pages 233-273.
  9. Freeman, Richard B., 2010. "Labor Regulations, Unions, and Social Protection in Developing Countries," Handbook of Development Economics, Elsevier.

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