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New Evidence On The Wage Curve: Non-Linearities, Urban Size, And Spatial Scale In Brazil

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  • ANA MARIA BONOMI BARUFI
  • EDUARDO AMARAL HADDAD
  • PETER NIJKAMP

Abstract

City size plays an important role in the relative bargaining power of workers and firms in labour markets. When analysing the relationship between local wages and the business cycle – wage flexibility, measured by the wage curve –, this influence appears to be higher in informal sectors in less densely populated areas in Brazil. Our study aims to shed new theoretical and empirical light on the importance of the wage curve, taking into account various specificities of developing economies. The applied modelling study in Brazil shows that wage flexibility is higher in less dense local labour markets and in the informal sector when compared to the formal sector. Furthermore, it is essential to control for unobserved local characteristics in order to obtain the ‘true’ elasticity of wages to local unemployment rates. Moreover, a significant part of the difference between the formal and the informal sectors originates from spatial effects.
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  • Ana Maria Bonomi Barufi & Eduardo Amaral Haddad & Peter Nijkamp, 2018. "New Evidence On The Wage Curve: Non-Linearities, Urban Size, And Spatial Scale In Brazil," Anais do XLIV Encontro Nacional de Economia [Proceedings of the 44th Brazilian Economics Meeting] 165, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    • Handle: RePEc:anp:en2016:165
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    JEL classification:

    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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