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Evolving Wage Cyclicality in Latin America

Listed author(s):
  • Gambetti, Luca

    ()

    (Autonomous University of Barcelona)

  • Messina, Julián

    ()

    (Inter-American Development Bank)

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 Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 10657.

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Length: 35 pages
Date of creation: Mar 2017
Handle: RePEc:iza:izadps:dp10657
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