Wage Rigidity and Disinflation in Emerging Countries

This paper examines the consequences of rapid disinflation for downward wage rigidities in two emerging countries, Brazil and Uruguay. Although wage rigidities are altered by disinflation, in neither of the two countries does price stability eliminate frictions in wage-setting mechanisms. In a conte...

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Main Authors:	Messina, Julián, Sanz-de-Galdeano, Anna
Format:	Journal Article
Language:	en_US
Published:	American Economic Association 2014
Subjects:	deflation inflation monetary policy wage differentials trade unions macroeconomic analyses economic development human resources human development income distribution migration
Online Access:	http://hdl.handle.net/10986/17928

id	okr-10986-17928
recordtype	oai_dc
spelling	okr-10986-179282021-04-23T14:03:41Z Wage Rigidity and Disinflation in Emerging Countries Messina, Julián Sanz-de-Galdeano, Anna deflation inflation monetary policy wage differentials trade unions macroeconomic analyses economic development human resources human development income distribution migration This paper examines the consequences of rapid disinflation for downward wage rigidities in two emerging countries, Brazil and Uruguay. Although wage rigidities are altered by disinflation, in neither of the two countries does price stability eliminate frictions in wage-setting mechanisms. In a context of individual wage negotiations and weak unions, disinflation in Uruguay puts an end to its history of indexation, but strong resistance to nominal wage cuts emerges. In strongly unionized Brazil, wage indexation is highly persistent, but the introduction of inflation targeting by the Central Bank in 1999 moves the focal point of wage negotiations to expected inflation. 2014-04-21T19:42:02Z 2014-04-21T19:42:02Z 2014-01 Journal Article American Economic Journal: Macroeconomics 1945-7707 10.1257/mac.6.1.102 http://hdl.handle.net/10986/17928 en_US CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo American Economic Association American Economic Association Publications & Research :: Journal Article Brazil Uruguay
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	en_US
topic	deflation inflation monetary policy wage differentials trade unions macroeconomic analyses economic development human resources human development income distribution migration
spellingShingle	deflation inflation monetary policy wage differentials trade unions macroeconomic analyses economic development human resources human development income distribution migration Messina, Julián Sanz-de-Galdeano, Anna Wage Rigidity and Disinflation in Emerging Countries
geographic_facet	Brazil Uruguay
description	This paper examines the consequences of rapid disinflation for downward wage rigidities in two emerging countries, Brazil and Uruguay. Although wage rigidities are altered by disinflation, in neither of the two countries does price stability eliminate frictions in wage-setting mechanisms. In a context of individual wage negotiations and weak unions, disinflation in Uruguay puts an end to its history of indexation, but strong resistance to nominal wage cuts emerges. In strongly unionized Brazil, wage indexation is highly persistent, but the introduction of inflation targeting by the Central Bank in 1999 moves the focal point of wage negotiations to expected inflation.
format	Journal Article
author	Messina, Julián Sanz-de-Galdeano, Anna
author_facet	Messina, Julián Sanz-de-Galdeano, Anna
author_sort	Messina, Julián
title	Wage Rigidity and Disinflation in Emerging Countries
title_short	Wage Rigidity and Disinflation in Emerging Countries
title_full	Wage Rigidity and Disinflation in Emerging Countries
title_fullStr	Wage Rigidity and Disinflation in Emerging Countries
title_full_unstemmed	Wage Rigidity and Disinflation in Emerging Countries
title_sort	wage rigidity and disinflation in emerging countries
publisher	American Economic Association
publishDate	2014
url	http://hdl.handle.net/10986/17928
_version_	1764438718458888192

Wage Rigidity and Disinflation in Emerging Countries

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