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Evolving Wage Cyclicality in Latin America

Author

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  • Gambetti, Luca

    () (Autonomous University of Barcelona)

  • Messina, Julián

    () (Inter-American Development Bank)

Abstract

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.

Suggested Citation

  • Gambetti, Luca & Messina, Julián, 2017. "Evolving Wage Cyclicality in Latin America," IZA Discussion Papers 10657, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp10657
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    References listed on IDEAS

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    More about this item

    Keywords

    downward wage rigidity; indexation; real wage cyclicality; vector autoregression; time varying coefficients; Bayesian estimation;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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