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The Effects of Economic Growth on Earnings in Bolivia

Author

Listed:
  • Beatriz Muriel

    (Institute for Advanced Development Studies)

  • Horacio Vera

    (Institute for Advanced Development Studies)

Abstract

This paper analyzes the effects of economic growth on labor earnings in Bolivia during 1999-2012. More precisely, we develop a labor market model to capture both cycle and trend effects of prices, and production on earnings, which is estimated econometrically using pseudo-panel data methods. The results show that labor earnings have had a pro-cyclical behavior. In particular, we find that, in the short run, an increase of 1% in prices or production explains an earnings rise of around 0.5%, while, in the long run, a production increase of 1% is associated with an earnings variation of 0.4%. Furthermore, we find that labor earnings growth by sector follows, to some extent, the economic performance of its corresponding sector, which responds to the sector segmentation characteristics in the Bolivian labor market.

Suggested Citation

  • Beatriz Muriel & Horacio Vera, 2015. "The Effects of Economic Growth on Earnings in Bolivia," Development Research Working Paper Series 08/2015, Institute for Advanced Development Studies.
    • Handle: RePEc:adv:wpaper:201508
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • E29 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Other
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J29 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Other
    • J39 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Other
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets

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