IDEAS home Printed from https://ideas.repec.org/p/bdr/borrec/632.html
   My bibliography  Save this paper

Wage-setting Decisions on Newly Hired Employees: Survey Evidence from Colombian Firms

Author

Listed:
  • Ana María Iregui

    ()

  • Ligia Alba Melo B.

    ()

  • María Teresa Ramírez G.

    ()

Abstract

This paper uses a survey on wage formation that was applied to 1,305 Colombian firms to study wage-setting decisions with respect to newly hired employees. The Colombian case is interesting, since the country’s labour market performance, especially its unemployment rate and level of informality, differs not only from the developed countries, where studies of this type are concentrated, but also from most Latin American countries. The replies to the survey indicate wages for the newly hired are based mainly on a predefined wage structure. This may help to explain, in part, the presence of downward nominal wage rigidities in Colombia, since firms are unwilling to differentiate the pay of new hires from the wages of existing workers. Using logit models, we find that the probability of wages being bargained between the employee and the employer is less in the case of larger firms. On the contrary, the larger firms are more likely to determine wages according to a predefined wage structure. In general, the presence of flexible benefits and variable pay reduces the probability of wages being determined pursuant to a predefined wage structure. The results also indicate the worker’s educational level, experience and job duties are the main determinants of the wages of newly hired employees.

Suggested Citation

  • Ana María Iregui & Ligia Alba Melo B. & María Teresa Ramírez G., 2010. "Wage-setting Decisions on Newly Hired Employees: Survey Evidence from Colombian Firms," Borradores de Economia 632, Banco de la Republica de Colombia.
  • Handle: RePEc:bdr:borrec:632
    as

    Download full text from publisher

    File URL: http://www.banrep.gov.co/docum/ftp/borra632.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. 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.
    2. 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, chapter 15, pages 403-449 Centro de Estudios Monetarios Latinoamericanos, CEMLA.
    3. Galuscak, Kamil & Keeney, Mary & Nicolitsas, Daphne & Smets, Frank & Strzelecki, Pawel & Vodopivec, Matija, 2012. "The determination of wages of newly hired employees: Survey evidence on internal versus external factors," Labour Economics, Elsevier, vol. 19(5), pages 802-812.
    4. 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 582, Banco de la Republica de Colombia.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Wage setting; newly hired employees; wage rigidities survey evidence; logit; Colombia Classification JEL: C25; J30; J50.;

    JEL classification:

    • J - Labor and Demographic Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bdr:borrec:632. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Clorith Angélica Bahos Olivera). General contact details of provider: http://edirc.repec.org/data/brcgvco.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.