Advanced Search
MyIDEAS: Login to save this paper or follow this series

Macroeconomic adjustment and the labor market in four Latin American countries

Contents:

Author Info

  • Lopez, Ramon E.
  • Riveros, Luis A.

Abstract

Implicit in standard macroeconomics of adjustment is the assumption of well-integrated labor markets that are responsive to relative prices. But segmentation of the labor market is usually said to be an important source of labor market rigidities. In particular, if segmentation involves different degrees of real wage rigidity among different groups in the labor force, nominal devaluation may be ineffective and inequitable in its impact. This paper uses a model of labor market segmentation in which regulations are necessary to distinguish between the formal and informal sectors. Using standard econometric techniques to estimate four simultaneous equations, the authors examine the effect of devaluation on relative wages in four countries. They found that formal wages are more responsive than informal wages to inflation and that devaluation of the exchange rate, by increasing the wage gap, is a source of sluggish labor mobility. In addition, they found that expanding wage differentials during adjustment imposes a greater burden on the poorest workers, making adjustment policies less politically sustainable. Finally, they found evidence to support the hypothesis that nominal devaluation would probably be ineffective with a segmented labor market.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/1989/12/01/000009265_3960928152143/Rendered/PDF/multi_page.pdf
Download Restriction: no

Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 335.

as in new window
Length:
Date of creation: 31 Dec 1989
Date of revision:
Handle: RePEc:wbk:wbrwps:335

Contact details of provider:
Postal: 1818 H Street, N.W., Washington, DC 20433
Phone: (202) 477-1234
Email:
Web page: http://www.worldbank.org/
More information through EDIRC

Related research

Keywords: Environmental Economics&Policies; Economic Theory&Research; Banks&Banking Reform; Labor Markets; Health Economics&Finance;

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Fiszbein, Ariel, 1992. "Do workers in the informal sector benefit from cuts in the minimum wage?," Policy Research Working Paper Series 826, The World Bank.
  2. Ricardo J. Caballero & Mohamad L. Hammour, 1995. "On the Ills of Adjustment," Working papers 95-21, Massachusetts Institute of Technology (MIT), Department of Economics.
  3. Daniele Checchi, 1996. "Macroeconomic populism: A formal representation and a suggested interpretation of the Peruvian experience (1985-90)," Journal of International Development, John Wiley & Sons, Ltd., vol. 8(4), pages 489-516.
  4. Derk Bienen, 2002. "Mindestlohnreformen in Südamerika – ökonomische Rechtfertigung und praktische Umsetzung," Ibero America Institute for Econ. Research (IAI) Discussion Papers 090, Ibero-America Institute for Economic Research.
  5. Stevenson, Gail, 1992. "How public sector pay and employment affect labor markets : research issues," Policy Research Working Paper Series 944, The World Bank.
  6. Palle S. Andersen, 1991. "Labour market developments in developing countries," BIS Working Papers 16, Bank for International Settlements.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:335. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.