IDEAS home Printed from https://ideas.repec.org/a/lde/journl/y2011i74p87-117.html
   My bibliography  Save this article

Manufacturing Employment and Wage Differentials After Structural Adjustment Reforms in Colombia: An Efficiency Wages Approach

Author

Listed:
  • Rodrigo Taborda
  • Juan Guataquí

Abstract

In the framework of the structural reforms in Colombia one of the most important policy proposals was reducing rigidities in the labor market. A perspective to assess the results of such reforms is the analysis of the relationship between firm employment and wage differentials in manufacturing before and after the reforms. If the labor reforms reached the intended objective of making more flexible the labor market, the employment levels must change faster, along with the behavior of wages and other labor costs, given some characteristics of firms and the economy. This paper addresses this topic proposing a model of wage differential and employment growth and testing its propositions before and after the structural reforms and controlling for industry and firm characteristics. A first finding is the confirmation of the positive relationship proposed between intra-industry wage differential and employment. In the inter-industry wage differential estimation, we find heterogeneous responses depending on the industry and a reduction in the autonomous labor turnover.

Suggested Citation

  • Rodrigo Taborda & Juan Guataquí, 2011. "Manufacturing Employment and Wage Differentials After Structural Adjustment Reforms in Colombia: An Efficiency Wages Approach," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 74, pages 87-117.
    • Handle: RePEc:lde:journl:y:2011:i:74:p:87-117
    as

    Download full text from publisher

    File URL: https://revistas.udea.edu.co/index.php/lecturasdeeconomia/issue/view/991
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Adriana Kugler, 2000. "The Incidence of Job Security Regulations on Labor Market Flexibility and Compliance in Colombia: Evidence from the 1990 Reform," Research Department Publications 3094, Inter-American Development Bank, Research Department.
    2. Ana María Iregui B. & Ligia Alba Melo B. & María Teresa Ramírez G., 2010. "Downward Wage Rigidities and Other Firms´ Responses to an Economic Slowdown: Evidence from a Survey of Colombian Firms," Borradores de Economia 7195, Banco de la Republica.
    3. James J. Heckman & Carmen Pagés, 2004. "Law and Employment: Lessons from Latin America and the Caribbean," NBER Books, National Bureau of Economic Research, Inc, number heck04-1.
    4. Campbell, Carl M, III, 1993. "Do Firms Pay Efficiency Wages? Evidence with Data at the Firm Level," Journal of Labor Economics, University of Chicago Press, vol. 11(3), pages 442-470, July.
    5. Carmen Pagés-Serra, 2000. "The Cost of Job Security Regulation: Evidence from Latin American Labor Markets," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2000), pages 109-154, August.
    6. Konings, Jozef & Walsh, Patrick P, 1994. "Evidence of Efficiency Wage Payments in UK Firm Level Panel Data," Economic Journal, Royal Economic Society, vol. 104(424), pages 542-555, May.
    7. Salop, Steven C, 1979. "A Model of the Natural Rate of Unemployment," American Economic Review, American Economic Association, vol. 69(1), pages 117-125, March.
    8. Joseph E. Stiglitz, 1974. "Alternative Theories of Wage Determination and Unemployment in LDC's: The Labor Turnover Model," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 88(2), pages 194-227.
    9. Juan Carlos Guataquí Roa & Andrés Felipe García-Suaza, 2009. "Efectos de la reforma laboral:¿más trabajo y menos empleos?," Revista ESPE - Ensayos Sobre Política Económica, Banco de la República, vol. 27(60), pages 46-79, December.
    10. Carmen Pagés-Serra & James J. Heckman, 2000. "The Cost of Job Security Regulation: Evidence from Latin American Labor Markets," Research Department Publications 4227, Inter-American Development Bank, Research Department.
    11. Adriana D. Kugler, 2004. "The Effect of Job Security Regulations on Labor Market Flexibility. Evidence from the Colombian Labor Market Reform," NBER Chapters, in: Law and Employment: Lessons from Latin America and the Caribbean, pages 183-228, National Bureau of Economic Research, Inc.
    12. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
    13. 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.
    14. Juan Carlos Echeverry & Mauricio Santamaria, 2004. "The Political Economy Of Labor Reform In Colombia," Documentos CEDE 3618, Universidad de los Andes, Facultad de Economía, CEDE.
    15. Adriana Kugler, 2000. "The Incidence of Job Security Regulations on Labor Market Flexibility and Compliance in Colombia: Evidence from the 1990 Reform," IDB Publications (Working Papers) 43042, Inter-American Development Bank.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. P R Agénor, 2005. "The Analytics of Segmented Labor Markets," Centre for Growth and Business Cycle Research Discussion Paper Series 52, Economics, The University of Manchester.
    2. Kaplan, David S., 2009. "Job creation and labor reform in Latin America," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 91-105, March.
    3. Campbell, Carl M., 2014. "The formation of wage expectations in the effort and quit decisions of workers," Economic Modelling, Elsevier, vol. 42(C), pages 313-322.
    4. Irène Selwaness & Chahir Zaki, 2015. "On the Interaction Between Trade Reforms and Labor Market Regulation: Evidence from the MENA Countries' Labor Markets," Working Papers 970, Economic Research Forum, revised Nov 2015.
    5. Manuel David Cruz, 2022. "Labor productivity, real wages, and employment: evidence from a panel of OECD economies over 1960-2019," Working Papers PKWP2203, Post Keynesian Economics Society (PKES).
    6. repec:eee:labchp:v:3:y:1999:i:pb:p:2291-2372 is not listed on IDEAS
    7. Campbell III, Carl M., 2008. "An efficiency wage approach to reconciling the wage curve and the Phillips curve," Labour Economics, Elsevier, vol. 15(6), pages 1388-1415, December.
    8. Rodrigo Taborda & Juan Carlos Guataqui, 2003. "Firm level evidence of efficiency wages and labor turnover in Colombia's manufacturing industry," Borradores de Investigación 2729, Universidad del Rosario.
    9. M. Ali Choudhary & Saima Mahmood & Sajawal Khan & Waqas Ahmed & Gylfi Zoega, 2013. "Sticky Wages in a Developing Country: Lessons from Structured Interviews in Pakistan," School of Economics Discussion Papers 0213, School of Economics, University of Surrey.
    10. Can, Raif, 2015. "The Impact of Employment Protection Legislation on the Unemployment Rate in Selected OECD Countries," MPRA Paper 63329, University Library of Munich, Germany.
    11. Vesna Stavrevska, 2011. "The efficiency wages perspective to wage rigidity in the open economy: a survey," International Journal of Manpower, Emerald Group Publishing Limited, vol. 32(3), pages 273-299, June.
    12. Manes, Eran & Schneider, Friedrich & Tchetchik, Anat, 2016. "On the Boundaries of the Shadow Economy: An Empirical Investigation," IZA Discussion Papers 10067, Institute of Labor Economics (IZA).
    13. Campbell, Carl III, 1995. "A cross-industry time-series analysis of quits," The Quarterly Review of Economics and Finance, Elsevier, vol. 35(1), pages 53-72.
    14. Vincenzo Scoppa, 2003. "The Role of Turnover Costs in the Enforcement of Performance–Related Pay Contracts," Metroeconomica, Wiley Blackwell, vol. 54(1), pages 60-78, February.
    15. Millea, Meghan & Fuess, Scott Jr., 2005. "Does pay affect productivity or react to it?: Examination of U.S. manufacturing," The Quarterly Review of Economics and Finance, Elsevier, vol. 45(4-5), pages 796-807, September.
    16. David KUCERA & Leanne RONCOLATO, 2008. "Informal employment: Two contested policy issues," International Labour Review, International Labour Organization, vol. 147(4), pages 321-348, December.
    17. Echavarría-Soto, Juan José & López, Enrique & Ocampo, Sergio & Rodríguez-Niño, Norberto, 2012. "Choques, instituciones laborales y desempleo en Colombia," Chapters, in: Arango-Thomas, Luis Eduardo & Hamann-Salcedo, Franz Alonso (ed.), El mercado de trabajo en Colombia : hechos, tendencias e instituciones, chapter 18, pages 753-794, Banco de la Republica de Colombia.
    18. Adriana Kugler & Maurice Kugler, 2009. "Labor Market Effects of Payroll Taxes in Developing Countries: Evidence from Colombia," Economic Development and Cultural Change, University of Chicago Press, vol. 57(2), pages 335-358, January.
    19. Goldsmith, Arthur H. & Veum, Jonathan R. & Darity, William Jr., 2000. "Working hard for the money? Efficiency wages and worker effort," Journal of Economic Psychology, Elsevier, vol. 21(4), pages 351-385, August.
    20. Tatiane Almeida De Menezes & Isabel Raposo, 2011. "Wage Differentials By Firm Size: Theefficiency Wage Test In Brazil," Anais do XXXVIII Encontro Nacional de Economia [Proceedings of the 38th Brazilian Economics Meeting] 236, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    21. Dragos Adascalitei & Sameer Khatiwada & Miguel Á. Malo & Pignatti Moran, 2015. "Employment protection and collective bargaining during the great recession: a comprehensive review of international evidence," Revista de Economía Laboral - Spanish Journal of Labour Economics, Asociación Española de Economía Laboral - AEET, vol. 12, pages 50-87.

    More about this item

    Keywords

    Efficiency wages; turn over; Colombia’s manufacturing industry;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:lde:journl:y:2011:i:74:p:87-117. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Carlos Andrés Vasco Correa (email available below). General contact details of provider: https://edirc.repec.org/data/deantco.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.