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An estimation of the wage curve for Uruguay

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Author Info

  • Marisa Bucheli

    ()
    (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)

  • Cecilia González

    ()
    (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)

Abstract

This paper analyzes the existence of a wage curve in Uruguay. We run several models using data for the period 1986-2005. We use two different proxies of the wage and we estimate both microdata and cell-mean regressions. Besides, we run the model for the whole sample and for groups of individuals disaggregated by level of education, gender, age and occupation. The results are consistent with the range of values found in similar studies for other countries. We find a negative relation between unemployment and wages. Specifically, we obtain an elasticity of -0.09. We find a higher elasticity for the youth, women and less educated workers. We also obtain difference results when disaggregating by occupation and formality. The results suggest that an increase of unemployment pushes up informality and self-employment which lead to a depression of earnings in these sectors. Thus, informality and self-employment would act as a buffer for unemployed formal wage earners.

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File URL: http://decon.edu.uy/publica/2007/1107.pdf
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Bibliographic Info

Paper provided by Department of Economics - dECON in its series Documentos de Trabajo (working papers) with number 1107.

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Length: 21 pages
Date of creation: Oct 2007
Date of revision:
Handle: RePEc:ude:wpaper:1107

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Keywords: wage curve; unemployment;

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References

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  1. Ipek Ilkkaracan & Raziye Selim, 2003. "The role of unemployment in wage determination: further evidence on the wage curve from Turkey," Applied Economics, Taylor & Francis Journals, vol. 35(14), pages 1589-1598.
  2. David G. Blanchflower & Andrew J. Oswald, 1995. "The Wage Curve," MIT Press Books, The MIT Press, edition 1, volume 1, number 026202375x, January.
  3. Julio de Brun & Gaston J. Labadie, 1998. "Rigidez salarial, precios relativos y ajuste estructural: Una interpretación del desempleo en Uruguay," Research Department Publications 4139, Inter-American Development Bank, Research Department.
  4. Baltagi, Badi H. & Blien, Uwe & Wolf, Katja, 2000. "The East German wage curve 1993-1998," Economics Letters, Elsevier, vol. 69(1), pages 25-31, October.
  5. Peter Nijkamp & Jacques Poot, 2005. "The Last Word on the Wage Curve?," Journal of Economic Surveys, Wiley Blackwell, vol. 19(3), pages 421-450, 07.
  6. Julio de Brun & Gastón J. Labadie, 1998. "Rigidez Salarial, Precios Relativos y Ajuste Estructural: Una Interpretación del Desempleo en Uruguay," IDB Publications 7630, Inter-American Development Bank.
  7. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
  8. Simonetta Longhi & Peter Nijkamp & Jacques Poot, 2006. "Spatial Heterogeneity And The Wage Curve Revisited," Journal of Regional Science, Wiley Blackwell, vol. 46(4), pages 707-731.
  9. David Card, 1995. "The Wage Curve: A Review," Working Papers 722, Princeton University, Department of Economics, Industrial Relations Section..
  10. Janine Berg & Dante Contreras, 2004. "Political-Economic Regime and the Wage Curve: Evidence from Chile, 1957-96," International Review of Applied Economics, Taylor & Francis Journals, vol. 18(2), pages 151-165.
  11. Esteban Sanroma Melendez & Raul Ramos Lobo, 2003. "Wage curves for Spain. Evidence from the family budget survey," Working Papers in Economics 101, Universitat de Barcelona. Espai de Recerca en Economia.
  12. 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.
  13. David G. Blanchflower & Andrew J. Oswald, 2005. "The Wage Curve Reloaded," NBER Working Papers 11338, National Bureau of Economic Research, Inc.
  14. Hoddinott, John, 1996. "Wages and Unemployment in an Urban African Labour Market," Economic Journal, Royal Economic Society, vol. 106(439), pages 1610-26, November.
  15. Barth, Erling & Bratsberg, Bernt & Naylor, Robin A. & Raaum, Oddbjørn, 2002. "Explaining Variations in Wage Curves: Theory and Evidence," Memorandum 03/2002, Oslo University, Department of Economics.
  16. repec:fth:prinin:343 is not listed on IDEAS
  17. Daniel Miles & Máximo Rossi, 2001. "Wage Inequality in Developing Countries: Market Forces or Government Intervention," Documentos de Trabajo (working papers) 1001, Department of Economics - dECON.
  18. Carlos Casacuberta & Marcel Vaillant, 2002. "Trade and wages in Uruguay in the 1990’s," Documentos de Trabajo (working papers) 0902, Department of Economics - dECON.
  19. 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.
  20. Simonetta Longhi & Peter Nijkamp & Jacques Poot, 2004. "Spatial Heterogeneity and the Wage Curve revisited," Tinbergen Institute Discussion Papers 04-054/3, Tinbergen Institute.
  21. Groot Wim & Mekkelholt Eddie & Oosterbeek, Hessel, 1992. "Further evidence on the wage curve," Economics Letters, Elsevier, vol. 38(3), pages 355-359, March.
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Cited by:
  1. 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.
  2. Maria Inés Terra & Marisa Bucheli & Carmen Estrades, 2008. "Trade Openness and Gender in Uruguay: a CGE Analysis," Working Papers MPIA 2008-16, PEP-MPIA.
  3. Cecilia Llambi & Silvia Laens & Marcelo Perera & Mery Ferrando, 2011. "Assessing the Impact of the 2007 Tax Reform on Povert and Inequality in Uruguay," Working Papers PMMA 2011-14, PEP-PMMA.
  4. Carmen Estrades & Cecilia Llambi, 2011. "Assessing the Impact of the Global Financial and Economic Crisis in Developing Countries: the Case of Uruguay," Working Papers MPIA 2011-16, PEP-MPIA.

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