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Are wages rigid in Colombia?: Empirical evidence based on a sample of wages at the firm level

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  • Ana María Iregui B.

    ()

  • Ligia Alba Melo B.

    ()

  • María Teresa Ramírez G.

    ()

Abstract

This paper uses Colombian data at the firm level for the period 1999 to 2006 to provide microeconomic evidence on the existence and extent of downward nominal wage rigidity. To conduct the analysis, we use a rich panel of firms for white and blue collar workers, consisting of 1517 firms for the former and 781 firms for the latter. The presence of wage rigidity is determined by means of three statistic techniques used in recent literature, such as the analysis of the histograms of the distribution of wage changes, the LSW statistic and the Kahn test. The results suggest the existence of downward nominal wage rigidities; it is worth mentioning that rigidity is higher for blue collar workers than white collar workers, since the increase in the wages of the blue workers is generally done by taking into account the change in the minimum wage, which is why a higher rigidity would be expected.

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Bibliographic Info

Paper provided by Banco de la Republica de Colombia in its series Borradores de Economia with number 571i.

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Handle: RePEc:bdr:borrec:571i

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Keywords: Wage rigidity; Kahn test; LSW Statistic; Colombia. Classification JEL: J31; E24; C23;

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Cited by:
  1. Andrés González & Lavan Mahadeva & Juan D. Prada & Diego Rodríguez, 2011. "Policy Analysis Tool Applied to Colombian Needs: Patacon Model Description," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE, BANCO DE LA REPÚBLICA - ESPE.
  2. Ana María Iregui B. & Ligia Alba Melo B. & María Teresa Ramírez G., . "Downward Wage Rigidities and Other Firms’ Responses to an Economic Slowdown: Evidence from a Survey of Colombian Firms," Borradores de Economia 612, Banco de la Republica de Colombia.
  3. Ana María Iregui B. & Ligia Alba Malo B. & María Teresa Ramírez G., 2011. "Wage Adjustment Practices and the Link between Price and Wages: Survey Evidence from Colombian Firms," BORRADORES DE ECONOMIA 008753, BANCO DE LA REPÚBLICA.

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