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Unemployment rate and the real wage behaviour: a neoclassical hint for the Colombian labour market adjustment

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Abstract

The Colombian urban unemployment rate has grown dramatically over the last six years. At the same time the real wage also had a sharp increase. The empirical evidence supports the hypothesis that an exogenous increase in the real wage was a cause of the unemployment growth. The long-run elasticity suggests a 1% increase of the real wage index increases unemployment rate something between 0.7% and 1.0%. Therefore it seems necessary that the real wage goes back to its equilibrium path for the reduction of the unemployment rate to the natural level.

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  • Luis Arango & Carlos Posada, 2002. "Unemployment rate and the real wage behaviour: a neoclassical hint for the Colombian labour market adjustment," Applied Economics Letters, Taylor & Francis Journals, vol. 9(7), pages 425-428.
    • Handle: RePEc:taf:apeclt:v:9:y:2002:i:7:p:425-428
    DOI: 10.1080/13504850110096142
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    Cited by:

    1. Luis Eduardo Arango & Carlos Esteban Posada, 2006. "The Time-Varying Long-Run Unemployment Rate: The Colombian Case," Borradores de Economia 389, Banco de la Republica de Colombia.
    2. James Alm & Hugo L�pez Casta�o, 2002. "Payroll taxes in Colombia," Informes de Investigación 3316, Fedesarrollo.
    3. Ricardo Bonilla González & Jorge Iván González, 2006. "Bien-estar y macroeconomía 2002-2006: el crecimiento inequitativo no es sostenible," Publicaciones, CID 2064, Universidad Nacional de Colombia, FCE, CID.
    4. Miguel Urrutia & Mauricio Ruiz, 2010. "Ciento setenta años de salarios reales en Colombia," Revista ESPE - Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 28(63), pages 154-189, December.
    5. Jesús Otero & Luis Fernando Gamboa & Andrés García-Suaza, 2011. "An analysis of the relationship between wages in the public and private sector in colombia: a panel data approach," Documentos de Trabajo 8738, Universidad del Rosario.
    6. Luis Eduardo Arango & Carlos Esteban Posada, 2006. "La Tasa De Desempleo De Largo Plazo En Colombia," Borradores de Economia 3085, Banco de la Republica.
    7. Ana Maria Iregui & Jesus Otero, 2003. "On the dynamics of unemployment in a developing economy: Colombia," Applied Economics Letters, Taylor & Francis Journals, vol. 10(14), pages 895-898.
    8. Cecilia Albert Verdú & Carlos Giovanni González Espitia & Jhon James Mora Rodríguez, 2013. "Determinantes de la demanda de educación universitaria en Colombia, 1980-2010," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 15(29), pages 169-194, July-Dece.
    9. 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.

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    More about this item

    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

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