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Microeconomic Evidence of Nominal Wage Rigidities in Chile

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  • Marcus Cobb C.
  • Luis Opazo R

Abstract

This document presents new evidence on the adjustment frequency of wages in Chile and their fundamentals. The data come from a database built from information gathered by the Chilean safety association Asociación Chilena de Seguridad (AChS). The base consists of a panel of 429 thousand wage records for the period 2001.12–2007.12. The results indicate that, on average, wages take a little over nine quarters to adjust completely. As for the determinants of such adjustments, the degree of downward flexibility of wages depends positively on the participation of younger workers (under 30), positively on firm size, and negatively on the proportion of high income workers. Finally, the sectoral effects are statistical and economically significant.

Suggested Citation

  • Marcus Cobb C. & Luis Opazo R, 2010. "Microeconomic Evidence of Nominal Wage Rigidities in Chile," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 13(1), pages 23-37, April.
    • Handle: RePEc:chb:bcchec:v:13:y:2010:i:1:p:23-37
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    References listed on IDEAS

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    1. Joseph G. Altonji & Paul J. Devereux, 1999. "The Extent and Consequences of Downward Nominal Wage Rigidity," NBER Working Papers 7236, National Bureau of Economic Research, Inc.
    2. Jan Babecký & Philip Du Caju & Theodora Kosma & Martina Lawless & Julián Messina & Tairi Rõõm, 2010. "Downward Nominal and Real Wage Rigidity: Survey Evidence from European Firms," Scandinavian Journal of Economics, Wiley Blackwell, vol. 112(4), pages 884-910, December.
    3. Jushan Bai & Pierre Perron, 2003. "Computation and analysis of multiple structural change models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(1), pages 1-22.
    4. Alan S. Blinder & Don H. Choi, 1990. "A Shred of Evidence on Theories of Wage Stickiness," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(4), pages 1003-1015.
    5. Carl M. Campbell III & Kunal S. Kamlani, 1997. "The Reasons for Wage Rigidity: Evidence from a Survey of Firms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(3), pages 759-789.
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    Cited by:

    1. W.F. Maloney & D. Lederman & J. Messina, 2011. "The Fall of Wage Flexibility," World Bank Publications - Reports 23575, The World Bank Group.

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