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Microeconomic Evidence of Nominal Wage Rigidity in Chile

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  • Marcus Cobb
  • Luis Opazo

Abstract

This paper presents micro evidence on the degree of downward nominal wage rigidity in Chile and also explores its consequences in terms of employment. The data used corresponds to a new panel based on 440 thousand wage histories for the period 2001.12-2007.12. The results indicate a low degree of wage flexibility, the estimated length of wage adjustment for the whole economy being around nine quarters. In terms of the determinants of wage rigidity, the degree of flexibility depends negatively on the size of the firm, the percentage of female workers, the age of workers and white-collar participation at firm level. The econometric estimations indicate that the direct consequence of wage rigidity is a higher fluctuation of employment through the business cycle.

Suggested Citation

  • Marcus Cobb & Luis Opazo, 2008. "Microeconomic Evidence of Nominal Wage Rigidity in Chile," Working Papers Central Bank of Chile 496, Central Bank of Chile.
    • Handle: RePEc:chb:bcchwp:496
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    File URL: https://www.bcentral.cl/documents/33528/133326/DTBC_496.pdf
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    References listed on IDEAS

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    Cited by:

    1. Ana Mar�a Iregui & Ligia Alba Melo & Mar�a Teresa Ram�rez, 2009. "Formaci�n e incrementos de salarios en Colombia: Un estudio microecon�mico a partir de una encuesta a nivel de firma," Borradores de Economia 6286, Banco de la Republica.
    2. Mrs. Esther Perez Ruiz, 2016. "Outside the Band: Depreciation and Inflation Dynamics in Chile," IMF Working Papers 2016/129, International Monetary Fund.
    3. Ahrens, Steffen & Pirschel, Inske & Snower, Dennis J., 2014. "A theory of wage adjustment under loss aversion," Kiel Working Papers 1977, Kiel Institute for the World Economy.
    4. Sánchez, Rafael, 2013. "Do reductions of standard hours affect employment transitions?: Evidence from Chile," Labour Economics, Elsevier, vol. 20(C), pages 24-37.
    5. repec:col:000092:000319 is not listed on IDEAS
    6. Laura Inés D'Amato & Enrique López Enciso & María Teresa Ramírez Giraldo (ed.), 2013. "Dinámica inflacionaria, persistencia y formación de precios y salarios," Investigación Conjunta-Joint Research, Centro de Estudios Monetarios Latinoamericanos, CEMLA, edition 1, volume 1, number 2, December.
    7. 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.
    8. Darwin Cortés & Diana Londoño & Cesar Valderrama & Carolina Soto & Stephany Amaya & Alberto Ocampo & Irma Ortiz & Gabriela Triviño, 2024. "Evaluación de las alternativas óptimas de implementación de la formalización laboral de las y los trabajadores del servicio doméstico en Colombia," Documentos de Trabajo 21321, Universidad del Rosario.

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