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Wage Adjustment Practices and the Link between Price and Wages: Survey Evidence from Colombian Firms

This paper explores firms’ wage adjustment practices in the Colombian formal labor market; specifically, the timing and frequency of wage increases, as well as the link between wage and price changes. We use a survey of 1,305 firms belonging to all economic sectors. The results show that most firms adjust base wages annually, increases were concentrated around observed inflation and none of the firms cut wages. Moreover, factors associated with the performance of firms and workers alike are the main determinants of wage adjustments. The link between wages and price changes is stronger in sectors where labor costs represent a higher share of total costs and in firms operating in sectors with higher labor productivity.

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Article provided by Universidad de Antioquia, Departamento de Economía in its journal LECTURAS DE ECONOMÍA.

Volume (Year): (2012)
Issue (Month): 76 ()
Pages: 17-53

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Handle: RePEc:lde:journl:y:2012:i:76:p:17-53
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Order Information: Postal: Lecturas de Economía, Departamento de Economía, Calle 67, 53-108, Medellin 050010, Colombia.

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  10. Ana María Iregui B. & Ligia Alba Melo B. & María Teresa Ramírez G., . "Downward Wage Rigidities and Other Firms’ Responses to an Economic Slowdown: Evidence from a Survey of Colombian Firms," Borradores de Economia 612, Banco de la Republica de Colombia.
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  15. Ana María Iregui B. & Ligia Alba Melo B. & María Teresa Ramírez G., . "Are wages rigid in Colombia?: Empirical evidence based on a sample of wages at the firm level," Borradores de Economia 571i, Banco de la Republica de Colombia.
  16. Martha Misas A. & Juan Carlos Parra A. & Enrique López E., 2011. "Heterogeneidad en la fijación de precios en Colombia: análisis de sus determinantes a partir de modelos de conteo," VNIVERSITAS ECONÓMICA 008301, UNIVERSIDAD JAVERIANA - BOGOTÁ.
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