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

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Author Info
Janine Berg (CEPA, New School University)
Dante Contreras (Universidad de Chile)

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Abstract

This paper tests whether a wage curve—a negative relationship between unemployment and pay—existed in Santiago, Chile during 1957-1996. The analysis is divided into two periods corresponding to the distinct economic models in place in the country. For 1957-1973, during the period of inward-led development, we reject the existence of a wage curve. The second period, 1974-1996, corresponds to an external opening of the economy and the deregulation of publicly controlled industries and labor relations. For this period, we find a wage curve of –0.08, which is similar to the United States and other western, capitalist economies. Disaggregating the analysis for different groups of workers, we find that since the economic reforms, women’s pay falls three times more than men’s when unemployment doubles. Also, non-university educated and public sector workers have suffered greater pay decreases from unemployment. Workers in the informal sector do not experience a drop in pay, contradicting the notion that the informal sector acts as a buffer for unemployed formal-sector workers.

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Paper provided by Schwartz Center for Economic Policy Analysis (SCEPA), The New School in its series SCEPA Working Papers with number 2002-10.

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Length: 33 pages
Date of creation: Aug 2002
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Handle: RePEc:epa:cepawp:2002-10

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Related research
Keywords: wage curve; unemployment; inequality; Chile;

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Find related papers by JEL classification:
J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
J60 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - General

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. David Card, 1995. "The Wage Curve: A Review," Working Papers 722, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
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  2. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August. [Downloadable!] (restricted)
  3. repec:fth:prinin:343 is not listed on IDEAS
  4. 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. [Downloadable!] (restricted)
  5. Kennedy, Steven & Borland, Jeff, 2000. "A Wage Curve for Australia?," Oxford Economic Papers, Oxford University Press, vol. 52(4), pages 774-803, October.
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  6. Blanchflower, David G & Oswald, Andrew J, 1990. " The Wage Curve," Scandinavian Journal of Economics, Blackwell Publishing, vol. 92(2), pages 215-35.
    Other versions:
    • Blanchflower, D. & Oswald, A., 1989. "The Wage Curve," Papers 340, London School of Economics - Centre for Labour Economics.
    • David G. Blanchflower & Andrew J. Oswald, 1990. "The Wage Curve," NBER Working Papers 3181, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    • David G. Blanchflower & Andrew J. Oswald, 1995. "The Wage Curve," MIT Press Books, The MIT Press, edition 1, volume 1, number 026202375x, April.
  7. Blanchflower, David G & Oswald, Andrew J, 1995. "An Introduction to the Wage Curve," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 153-67, Summer. [Downloadable!] (restricted)
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  1. David G. Blanchflower & Andrew J. Oswald, 2005. "The Wage Curve Reloaded," IZA Discussion Papers 1665, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. 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. [Downloadable!]
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