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The Effects of Economic Growth on Earnings in Bolivia

Author

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  • 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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    File URL: http://www.inesad.edu.bo/pdf/wp2015/wp08_2015.pdf
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    References listed on IDEAS

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    1. Verbeek, Marno & Nijman, Theo, 1993. "Minimum MSE estimation of a regression model with fixed effects from a series of cross-sections," Journal of Econometrics, Elsevier, vol. 59(1-2), pages 125-136, September.
    2. Beatriz Muriel & Luis Carlos Jemio, 2010. "Mercado laboral y reformas en Bolivia," Capítulos de Libros PUCP / Chapters of PUCP books,in: José Rodríguez & Albert Berry (ed.), Desafíos laborales en América Latina después de dos décadas de reformas estructurales. Bolivia, Paraguay y Perú 1997-2008, edition 1, chapter 5, pages 273-356 Fondo Editorial - Pontificia Universidad Católica del Perú.
    3. Fatih Guvenen & Greg Kaplan & Jae Song, 2014. "How Risky Are Recessions for Top Earners?," American Economic Review, American Economic Association, vol. 104(5), pages 148-153, May.
    4. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters,in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
    5. Inoue, Atsushi, 2008. "Efficient estimation and inference in linear pseudo-panel data models," Journal of Econometrics, Elsevier, vol. 142(1), pages 449-466, January.
    6. Beatriz Muriel & Ernesto Bernal & Gabriela Olivarez, 2015. "Pobreza, Ingresos Laborales y Trabajo en Bolivia," Development Research Working Paper Series 09/2015, Institute for Advanced Development Studies.
    7. Hodrick, Robert J & Prescott, Edward C, 1997. "Postwar U.S. Business Cycles: An Empirical Investigation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(1), pages 1-16, February.
    8. Verbeek, Marno & Nijman, Theo, 1992. "Can Cohort Data Be Treated as Genuine Panel Data?," Empirical Economics, Springer, vol. 17(1), pages 9-23.
    9. Stéphane Bonhomme & Laura Hospido, 2012. "The cycle of earnings inequality: evidence from Spanish social security data," Working Papers 1225, Banco de España;Working Papers Homepage.
    10. Bils, Mark J, 1985. "Real Wages over the Business Cycle: Evidence from Panel Data," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 666-689, August.
    11. Deaton, Angus, 1985. "Panel data from time series of cross-sections," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 109-126.
    12. Beatriz Muriel, 2011. "Rethinking Earnings Determinants in the Urban Areas of Bolivia," Development Research Working Paper Series 06/2011, Institute for Advanced Development Studies.
    13. Uribe, Alejandra & Hernani-Limarino, Werner L., 2013. "Pobreza monetaria. Crecimiento y redistribución," Revista Latinoamericana de Desarrollo Economico, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana, issue 20, pages 149-230, Noviembre.
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    15. Mercado, Alejandro F. & Andersen, Lykke E. & Muriel H., Beatriz, 2003. "Discriminación étnica en el sistema educativo y el mercado de trabajo de Bolivia," Revista Latinoamericana de Desarrollo Economico, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana, issue 1, pages 63-98, Septiembr.
    16. repec:aru:wpaper:201303 is not listed on IDEAS
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    More about this item

    Keywords

    Bolivia; earnings; wages; economic growth; business cycle; pseudo-panel;

    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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