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, relying on high quality matched employer-employee administrative data. Downward nominal wage rigidities are more...

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Main Authors:	Messina, Julian, Sanz-de-Galdeano, Anna
Format:	Policy Research Working Paper
Language:	English
Published:	2012
Subjects:	ADVERSE SELECTION AGED WORKERS AGRICULTURE BARGAINING POWER BASE YEAR BENCHMARK BUSINESS CYCLES CENTRAL BANK CPI DECENTRALIZATION DEVELOPED COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISINFLATION DOWNWARD BIAS EARNING ECONOMIC ACTIVITY EDUCATIONAL ATTAINMENT EFFICIENCY WAGES EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPLOYEE EMPLOYMENT EQUILIBRIUM UNEMPLOYMENT ESTIMATED PROBABILITY EXPECTED WAGE FIRM LEVEL FISHING FORECASTS FORESTRY FUTURE RESEARCH GROWTH RATE HUMAN CAPITAL INCOME INCOME COUNTRIES INDEXATION INFLATION RATE INFLATION RATES JOBS LABOR CONTRACT LABOR CONTRACTS LABOR COST LABOR ECONOMICS LABOR FORCE LABOR MARKET LABOR MARKET INSTITUTIONS LABOR MARKETS LABOR TURNOVER LAYOFFS MACROECONOMIC EFFECTS MACROECONOMIC STABILIZATION MACROECONOMICS MENU COSTS MINIMUM WAGE MINIMUM WAGES MONETARY POLICY NOMINAL WAGES OCCUPATION PAYING JOB POLICY ENVIRONMENT POLITICAL ECONOMY PREVIOUS DISCUSSION PREVIOUS SECTION PREVIOUS STUDIES PRICE CHANGES PRICE SETTING PRIVATE SECTOR PRIVATE SECTOR WORKERS PRODUCTIVITY REAL GDP REAL WAGE SALARY SEVERANCE PAYMENTS TAXABLE INCOME TROUGH UNEMPLOYMENT UNION DENSITY WAGE BARGAINING WAGE DATA WAGE DETERMINATION WAGE DISTRIBUTION WAGE FLEXIBILITY WAGE GROWTH WAGE INCREASE WAGE INCREASES WAGE LEVEL WAGE LEVELS WAGE NEGOTIATIONS WAGE RIGIDITIES WAGE RIGIDITY WHITE COLLAR WORKER WHITE COLLAR WORKERS WORKER WORKERS YOUNG WORKERS YOUNGER WORKERS
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111031104848 http://hdl.handle.net/10986/3629

id	okr-10986-3629
recordtype	oai_dc
spelling	okr-10986-36292021-04-23T14:02:11Z Wage Rigidity and Disinflation in Emerging Countries Messina, Julian Sanz-de-Galdeano, Anna ADVERSE SELECTION AGED WORKERS AGRICULTURE BARGAINING POWER BASE YEAR BENCHMARK BUSINESS CYCLES CENTRAL BANK CPI DECENTRALIZATION DEVELOPED COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISINFLATION DOWNWARD BIAS EARNING ECONOMIC ACTIVITY EDUCATIONAL ATTAINMENT EFFICIENCY WAGES EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPLOYEE EMPLOYMENT EQUILIBRIUM UNEMPLOYMENT ESTIMATED PROBABILITY EXPECTED WAGE FIRM LEVEL FISHING FORECASTS FORESTRY FUTURE RESEARCH GROWTH RATE HUMAN CAPITAL INCOME INCOME COUNTRIES INDEXATION INFLATION RATE INFLATION RATES JOBS LABOR CONTRACT LABOR CONTRACTS LABOR COST LABOR ECONOMICS LABOR FORCE LABOR MARKET LABOR MARKET INSTITUTIONS LABOR MARKETS LABOR TURNOVER LAYOFFS MACROECONOMIC EFFECTS MACROECONOMIC STABILIZATION MACROECONOMICS MENU COSTS MINIMUM WAGE MINIMUM WAGES MONETARY POLICY NOMINAL WAGES OCCUPATION PAYING JOB POLICY ENVIRONMENT POLITICAL ECONOMY PREVIOUS DISCUSSION PREVIOUS SECTION PREVIOUS STUDIES PRICE CHANGES PRICE SETTING PRIVATE SECTOR PRIVATE SECTOR WORKERS PRODUCTIVITY REAL GDP REAL WAGE SALARY SEVERANCE PAYMENTS TAXABLE INCOME TROUGH UNEMPLOYMENT UNION DENSITY WAGE BARGAINING WAGE DATA WAGE DETERMINATION WAGE DISTRIBUTION WAGE FLEXIBILITY WAGE GROWTH WAGE INCREASE WAGE INCREASES WAGE LEVEL WAGE LEVELS WAGE NEGOTIATIONS WAGE RIGIDITIES WAGE RIGIDITY WHITE COLLAR WORKER WHITE COLLAR WORKERS WORKER WORKERS YOUNG WORKERS YOUNGER WORKERS This paper examines the consequences of rapid disinflation for downward wage rigidities in two emerging countries, Brazil and Uruguay, relying on high quality matched employer-employee administrative data. Downward nominal wage rigidities are more important in Uruguay, while wage indexation is dominant in Brazil. Two regime changes are observed during the sample period, 1995-2004: (i) in Uruguay wage indexation declines, while workers' resistance to nominal wage cuts becomes more pronounced; and (ii) in Brazil, the introduction of inflation targeting by the Central Bank in 1999 shifts the focal point of wage negotiations from changes in the minimum wage to expected inflation. These regime changes cast doubts on the notion that wage rigidity is structural in the sense of Lucas (1976). 2012-03-19T18:05:51Z 2012-03-19T18:05:51Z 2011-10-01 http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111031104848 http://hdl.handle.net/10986/3629 English Policy Research working paper ; no. WPS 5863 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research :: Policy Research Working Paper Latin America & Caribbean South America America Uruguay Brazil
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ADVERSE SELECTION AGED WORKERS AGRICULTURE BARGAINING POWER BASE YEAR BENCHMARK BUSINESS CYCLES CENTRAL BANK CPI DECENTRALIZATION DEVELOPED COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISINFLATION DOWNWARD BIAS EARNING ECONOMIC ACTIVITY EDUCATIONAL ATTAINMENT EFFICIENCY WAGES EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPLOYEE EMPLOYMENT EQUILIBRIUM UNEMPLOYMENT ESTIMATED PROBABILITY EXPECTED WAGE FIRM LEVEL FISHING FORECASTS FORESTRY FUTURE RESEARCH GROWTH RATE HUMAN CAPITAL INCOME INCOME COUNTRIES INDEXATION INFLATION RATE INFLATION RATES JOBS LABOR CONTRACT LABOR CONTRACTS LABOR COST LABOR ECONOMICS LABOR FORCE LABOR MARKET LABOR MARKET INSTITUTIONS LABOR MARKETS LABOR TURNOVER LAYOFFS MACROECONOMIC EFFECTS MACROECONOMIC STABILIZATION MACROECONOMICS MENU COSTS MINIMUM WAGE MINIMUM WAGES MONETARY POLICY NOMINAL WAGES OCCUPATION PAYING JOB POLICY ENVIRONMENT POLITICAL ECONOMY PREVIOUS DISCUSSION PREVIOUS SECTION PREVIOUS STUDIES PRICE CHANGES PRICE SETTING PRIVATE SECTOR PRIVATE SECTOR WORKERS PRODUCTIVITY REAL GDP REAL WAGE SALARY SEVERANCE PAYMENTS TAXABLE INCOME TROUGH UNEMPLOYMENT UNION DENSITY WAGE BARGAINING WAGE DATA WAGE DETERMINATION WAGE DISTRIBUTION WAGE FLEXIBILITY WAGE GROWTH WAGE INCREASE WAGE INCREASES WAGE LEVEL WAGE LEVELS WAGE NEGOTIATIONS WAGE RIGIDITIES WAGE RIGIDITY WHITE COLLAR WORKER WHITE COLLAR WORKERS WORKER WORKERS YOUNG WORKERS YOUNGER WORKERS
spellingShingle	ADVERSE SELECTION AGED WORKERS AGRICULTURE BARGAINING POWER BASE YEAR BENCHMARK BUSINESS CYCLES CENTRAL BANK CPI DECENTRALIZATION DEVELOPED COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISINFLATION DOWNWARD BIAS EARNING ECONOMIC ACTIVITY EDUCATIONAL ATTAINMENT EFFICIENCY WAGES EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPLOYEE EMPLOYMENT EQUILIBRIUM UNEMPLOYMENT ESTIMATED PROBABILITY EXPECTED WAGE FIRM LEVEL FISHING FORECASTS FORESTRY FUTURE RESEARCH GROWTH RATE HUMAN CAPITAL INCOME INCOME COUNTRIES INDEXATION INFLATION RATE INFLATION RATES JOBS LABOR CONTRACT LABOR CONTRACTS LABOR COST LABOR ECONOMICS LABOR FORCE LABOR MARKET LABOR MARKET INSTITUTIONS LABOR MARKETS LABOR TURNOVER LAYOFFS MACROECONOMIC EFFECTS MACROECONOMIC STABILIZATION MACROECONOMICS MENU COSTS MINIMUM WAGE MINIMUM WAGES MONETARY POLICY NOMINAL WAGES OCCUPATION PAYING JOB POLICY ENVIRONMENT POLITICAL ECONOMY PREVIOUS DISCUSSION PREVIOUS SECTION PREVIOUS STUDIES PRICE CHANGES PRICE SETTING PRIVATE SECTOR PRIVATE SECTOR WORKERS PRODUCTIVITY REAL GDP REAL WAGE SALARY SEVERANCE PAYMENTS TAXABLE INCOME TROUGH UNEMPLOYMENT UNION DENSITY WAGE BARGAINING WAGE DATA WAGE DETERMINATION WAGE DISTRIBUTION WAGE FLEXIBILITY WAGE GROWTH WAGE INCREASE WAGE INCREASES WAGE LEVEL WAGE LEVELS WAGE NEGOTIATIONS WAGE RIGIDITIES WAGE RIGIDITY WHITE COLLAR WORKER WHITE COLLAR WORKERS WORKER WORKERS YOUNG WORKERS YOUNGER WORKERS Messina, Julian Sanz-de-Galdeano, Anna Wage Rigidity and Disinflation in Emerging Countries
geographic_facet	Latin America & Caribbean South America America Uruguay Brazil
relation	Policy Research working paper ; no. WPS 5863
description	This paper examines the consequences of rapid disinflation for downward wage rigidities in two emerging countries, Brazil and Uruguay, relying on high quality matched employer-employee administrative data. Downward nominal wage rigidities are more important in Uruguay, while wage indexation is dominant in Brazil. Two regime changes are observed during the sample period, 1995-2004: (i) in Uruguay wage indexation declines, while workers' resistance to nominal wage cuts becomes more pronounced; and (ii) in Brazil, the introduction of inflation targeting by the Central Bank in 1999 shifts the focal point of wage negotiations from changes in the minimum wage to expected inflation. These regime changes cast doubts on the notion that wage rigidity is structural in the sense of Lucas (1976).
format	Publications & Research :: Policy Research Working Paper
author	Messina, Julian Sanz-de-Galdeano, Anna
author_facet	Messina, Julian Sanz-de-Galdeano, Anna
author_sort	Messina, Julian
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
publishDate	2012
url	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111031104848 http://hdl.handle.net/10986/3629
_version_	1764387513854590976

Wage Rigidity and Disinflation in Emerging Countries

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