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RDownward Wage Rigidities and Other Firms Responses to an Economic Slowdown: Evidence from a Survey of Colombian Firms

In: Inflationary Dynamics, Persistence, and Prices and Wages Formation

Author

Listed:
  • Ana María Iregui B.

    (Banco de la República, de Colombia)

  • ligia Alba Melo Becerra

    (Banco de la República, de Colombia)

  • María Teresa Ramírez Giraldo

    (Banco de la República, de Colombia)

Abstract

This paper uses a wage setting survey of 1,305 Colombian firms to explore the nature and sources of wage rigidities. This is the first study of a non-European emerging economy that uses evidence from a survey of firms to analyse this topic. The survey was carried out during the first half of 2009, when the Colombian economy was showing signs of a slowdown in economic activity and increasing unemployment. The sample is fully representative of the population under study. The results provide evidence of nominal and real downward wage rigidities in the country. The most important factor in not reducing base wages during an economic slowdown is to avoid the loss of more experienced and productive workers, which is related to the efficiency wage theory in its adverse selection version. In addition, ordered logit regressions were used to determine what factors are related to wage rigidities. The findings indicate that, in general, permanent contracts, workforce composition, labour intensity and the presence of collective agreements play an important role in explaining wage rigidities in the country.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Ana María Iregui B. & ligia Alba Melo Becerra & María Teresa Ramírez Giraldo, 2013. "RDownward Wage Rigidities and Other Firms Responses to an Economic Slowdown: Evidence from a Survey of Colombian Firms," Investigación Conjunta-Joint Research, in: Laura Inés D'Amato & Enrique López Enciso & María Teresa Ramírez Giraldo (ed.), Inflationary Dynamics, Persistence, and Prices and Wages Formation, edition 1, volume 1, chapter 15, pages 403-449, Centro de Estudios Monetarios Latinoamericanos, CEMLA.
    • Handle: RePEc:cml:incocp:2en-15
    Note: Joint Research Program: XV Meeting of the Central Bank Researchers Network
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    Citations

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    Cited by:

    1. is not listed on IDEAS
    2. Juan Carlos Segura Ortiz, 2016. "Sobre el uso de curvas de salarios en modelos empíricos de equilibrio económico. Resena e introducción computacional," Revista Equidad y Desarrollo, Universidad de la Salle, issue 26, pages 172-189.
    3. Ana Iregui & Ligia Melo & María Ramírez, 2012. "Wage Adjustment Practices and the Link between Price and Wages: Survey Evidence from Colombian Firms," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 76, pages 17-53.
    4. Gustavo Hernández, 2012. "Payroll Taxes and the Labor Market: A Computable General Equilibrium Analysis," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 49(1), pages 99-123, May.
    5. Ana María Iregui & Ligia Alba Melo & María Teresa Ramírez, 2014. "Wage‐setting Decisions on Newly Hired Employees: Survey Evidence from Colombian Firms," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 35(3), pages 231-246, April.
    6. Ana Mar�a iregui & Ligia Alba Melo B. & Mar�a Teresa Ram�rez G., 2010. "Wage-setting Decisions on Newly Hired Employees:," Borradores de Economia 7808, Banco de la Republica.
    7. Ana María Iregui & Ligia Alba Melo & María Teresa Ramírez, 2010. "Incrementos y rigideces de los salarios en Colombia: Un estudio a partir de una encuesta," Revista de Economía del Rosario, Universidad del Rosario.

    More about this item

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

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