Downward Real Wage Rigidity in Colombia

Type Journal Article - Universitat AutÚnoma de Barcelona
Title Downward Real Wage Rigidity in Colombia
Publication (Day/Month/Year) 2015
Based on Holden and Wulfsberg (2009), we explore the potential existence of
downward real wage rigidity (DRWR) in Colombia. We provide a sectorial level
analysis based on data from thirteen metropolitan areas over the period 2002-2014.
We Önd that DRWR compresses the distributions of aggregate wage changes overall,
as well as in speciÖc sectors and periods. In particular we estimated a deÖcit of real
wage cuts by 16.27%. Furthermore, we show that wage rigidity in Colombia is not
connected to the wage bargaining system, in contrast to the vast empirical evidence
on developed countries. On the contrary, the minimum wage and labor informality
appear as the crucial drivers.

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