Is the Wage Curve Formal or Informal? Evidence for Colombia
AbstractThe objective of this paper is to analyse the existence or not of a wage curve in Colombia, paying special attention to the differences between formal and informal workers, an issue that has been systematically ignored in the wage curve literature. The obtained results using microdata from the Colombian Continuous Household Survey (CHS) between 2002 and 2006 show the existence of a wage curve with a negative slope for the Colombian economy. Using information on metropolitan areas, the estimates of the elasticity of individual wages to local unemployment rates was -0.07, a value that is very close to those obtained for other countries. However, the disaggregation of statistical information for formal and informal workers has shown significant differences among both groups of workers. In particular, for the less protected groups of the labour market, informal workers (both men and women), a high negatively sloped wage curve was found. This result is consistent with the conclusions from efficiency wage theoretical models and should be taken into account when analysing the functioning of regional labour markets in developing countries.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4461.
Length: 15 pages
Date of creation: Oct 2009
Date of revision:
Publication status: published in: Economics Letters, 2010, 109 (2), 63-65
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Other versions of this item:
- 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.
- Raul Ramos & Juan Carlos Duque & Jordi Suriñach, 2009. "Is The Wage Curve Formal Or Informal? Evidence For Colombia," IREA Working Papers 200918, University of Barcelona, Research Institute of Applied Economics, revised Jul 2009.
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
- J60 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - General
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-10-24 (All new papers)
- NEP-DEV-2009-10-24 (Development)
- NEP-GEO-2009-10-24 (Economic Geography)
- NEP-LAB-2009-10-24 (Labour Economics)
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