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Is The Wage Curve Formal Or Informal? Evidence For Colombia

  • Raul Ramos


    (Faculty of Economics, University of Barcelona)

  • Juan Carlos Duque


    (Research in Spatial Economics, EAFIT University)

  • Jordi Suriñach


    (Faculty of Economics, University of Barcelona)

The objective of this paper is to analyse the existence or not of a wage curve in Colombia, paying special attention to the differences between formal and informal workers, an issue that has been systematically ignored in the wage curve literature. The obtained results using microdata from the Colombian Continuous Household Survey (CHS) between 2002 and 2006 show the existence of a wage curve with a negative slope for the Colombian economy. Using information on metropolitan areas, the estimates of the elasticity of individual wages to local unemployment rates was -0.07, a value that is very close to those obtained for other countries. However, the disaggregation of statistical information for formal and informal workers has shown significant differences among both groups of workers. In particular, for the less protected groups of the labour market, informal workers (both men and women), a high negatively sloped wage curve was found. This result is consistent with the conclusions from efficiency wage theoretical models and should be taken into account when analysing the functioning of regional labour markets in developing countries.

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Paper provided by University of Barcelona, Research Institute of Applied Economics in its series IREA Working Papers with number 200918.

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Length: 11 pages
Date of creation: Jul 2009
Date of revision: Jul 2009
Handle: RePEc:ira:wpaper:200918
Contact details of provider: Postal: Tinent Coronel Valenzuela, Num 1-11 08034 Barcelona
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