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Evolving Wage Cyclicality in Latin America

Listed author(s):
  • Luca Gambetti
  • Julián Messina

This paper examines the evolution of the cyclicality of real wages and employment in four Latin American economies (Brazil, Chile, Colombia and Mexico) during the period 1980-2010. Wages are highly pro-cyclical during the 1980s and early 1990s, a period characterized by high inflation. As inflation declined wages became less pro-cyclical, a feature that is consistent with emerging downward wage rigidities in a low-inflation environment. Compositional effects associated with changes in labor participation along the business cycle appear to matter less for estimates of wage cyclicality than in developed economies.

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Paper provided by Inter-American Development Bank in its series IDB Publications (Working Papers) with number 95280.

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Date of creation: Aug 2016
Handle: RePEc:idb:brikps:95280
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