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Wage differentials across economic sectors in the Colombian formal labour market: evidence from a survey of firms

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  • Ana María Iregui B.
  • Ligia Alba Melo B.
  • María Teresa Ranírez G.

Abstract

The existence of wage differentials across sectors is a widely observed phenomenon. This paper provides new elements to understand inter and intra-sectoral wage differentials in Colombia by analysing a wage setting survey of 1305 firms and emphasizing the role of firm characteristics. The results from the descriptive analysis of the survey confirm the existence of substantial wage differentials across sectors and occupational positions in the country. We found positive wage differentials, with respect to the average of the economy for the different occupational groups, in electricity, gas, water and mining, financial services and manufacturing and strong negative wage differentials in agriculture, forestry and fishing. When analysing wage differential within each occupational group, higher wage dispersion is observed in the case of managers, followed by professionals. The lower wage dispersion for the least qualified jobs could be associated with the existence of a minimum wage in the country. In addition, we estimate cross section models for each occupational group and sector to account for the importance of firm characteristics in explaining wage differentials.

Suggested Citation

  • Ana María Iregui B. & Ligia Alba Melo B. & María Teresa Ranírez G., 2010. "Wage differentials across economic sectors in the Colombian formal labour market: evidence from a survey of firms," Borradores de Economia 629, Banco de la Republica de Colombia.
    • Handle: RePEc:bdr:borrec:629
    DOI: 10.32468/be.629
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    References listed on IDEAS

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    1. Gracia Orlando & Gustavo Hernández & Juan Mauricio Ramirez, 2001. "Diferenciales salariales y mercados laborales en la industria colombiana," Revista Desarrollo y Sociedad, Universidad de los Andes,Facultad de Economía, CEDE, September.
    2. Philip Du Caju & Gábor Kátay & Ana Lamo & Daphne Nicolitsas & Steven Poelhekke, 2010. "Inter-Industry Wage Differentials In EU Countries: What Do Cross-Country Time Varying Data Add to the Picture?," Journal of the European Economic Association, MIT Press, vol. 8(2-3), pages 478-486, 04-05.
    3. Alejandro Hoyos & Hugo Ñopo & Ximena Peña, 2010. "The Persistent Gender Earnings Gap in Colombia, 1994-2006," Documentos CEDE 7094, Universidad de los Andes, Facultad de Economía, CEDE.
    4. Philip Du Caju & Gábor Kátay & Ana Lamo & Daphne Nicolitsas & Steven Poelhekke, 2010. "Inter-industry wage differentials in EU countries : What do cross-country time-varying data add to the picture ?," Working Paper Research 189, National Bank of Belgium.
    5. Björklund, Anders & Bratsberg, Bernt & Eriksson, Tor & Jäntti, Markus & Raaum, Oddbjørn, 2004. "Inter-Industry Wage Differentials and Unobserved Ability: Siblings Evidence from Five Countries," IZA Discussion Papers 1080, Institute of Labor Economics (IZA).
    6. Ana María Iregui & Ligia Alba Melo & María Teresa Ramírez, 2009. "Formación e incrementos de salarios en Colombia: Un estudio microeconómico a partir de una encuesta a nivel de firma," Borradores de Economia 6286, Banco de la Republica.
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    Citations

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    Cited by:

    1. Vargas-Riaño, Carmiña Ofelia, 2012. "Cambio tecnológico y desigualdad de salarios : Colombia, 1984-2010," Chapters, in: Arango-Thomas, Luis Eduardo & Hamann-Salcedo, Franz Alonso (ed.), El mercado de trabajo en Colombia : hechos, tendencias e instituciones, chapter 5, pages 211-251, Banco de la Republica de Colombia.
    2. 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.
    3. Ana María iregui & Ligia Alba Melo B. & María Teresa Ramírez G., 2010. "Wage-setting Decisions on Newly Hired Employees:," Borradores de Economia 7808, Banco de la Republica.
    4. Carmiña O. Vargas, 2011. "Desigualdad de salarios en Colombia: evidencia a partir de encuestas de hogares 1984 -2010," Borradores de Economia 661, Banco de la Republica de Colombia.
    5. Sebastian Sterl, 2018. "Determinanten zur Einkommensentwicklung in Deutschland: Ein Vergleich von Personen mit und ohne Migrationshintergrund auf Basis des Sozio-oekonomischen Panels (SOEP)," SOEPpapers on Multidisciplinary Panel Data Research 992, DIW Berlin, The German Socio-Economic Panel (SOEP).
    6. Diego Winkelried, 2014. "Exchange rate pass-through and inflation targeting in Peru," Empirical Economics, Springer, vol. 46(4), pages 1181-1196, June.

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    More about this item

    Keywords

    Wage differentials; survey of firms; labour market; cross section estimation.;
    All these keywords.

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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