Wage determination in Argentina: an econometric analysis with methodology discussion

Autores
Galiani, Sebastian
Año de publicación
2000
Idioma
inglés
Tipo de recurso
documento de conferencia
Estado
versión publicada
Descripción
Micro evidence on the relationship between wages and unemployment has been provided recently in a series of contributions by Blanchflower and Oswald (1994, 1995). They argue for the existence of a wage curve linking local wages to local unemployment. They claim the relationship to be static. They also claim that the unemployment elasticity of pay is -0.1 across-countries. They claim that this shows that countries exhibit the same degree of wage flexibility. In this paper we study wage determination in Argentina. We believe that both regional and national factors affect wage setting. Thus, we also favor the modelization at the regional level of aggregation. However, we show that a regional wage two-way fixed effects error component model does not identify the effect of aggregate variables on wages though it controls for them. Thus, the claim that the estimated unemployment elasticity of pay in this model provides a good measure of wage flexibility may be misleading. We propose a three-step estimator that may identify the whole set of parameters of interest in a wage equation. That is, we propose a statistical procedure that may consistently estimate the coefficients of both local and aggregate variables that affect wage setting. We reject the existence of a static wage curve in favor of a dynamic regional wage equation. Additionally, we tentatively favor an error correction mechanism representation instead of a Phillips curve type representation for the common time series component of the regional wages.
Departamento de Economía
Materia
Ciencias Económicas
local and aggregate determinants of wages; three-step procedure; Phillips curve;error correction mechanism
econometría
Argentina
salario
Nivel de accesibilidad
acceso abierto
Condiciones de uso
http://creativecommons.org/licenses/by/3.0/
Repositorio
SEDICI (UNLP)
Institución
Universidad Nacional de La Plata
OAI Identificador
oai:sedici.unlp.edu.ar:10915/3661

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spelling Wage determination in Argentina: an econometric analysis with methodology discussionGaliani, SebastianCiencias Económicaslocal and aggregate determinants of wages; three-step procedure; Phillips curve;error correction mechanismeconometríaArgentinasalarioMicro evidence on the relationship between wages and unemployment has been provided recently in a series of contributions by Blanchflower and Oswald (1994, 1995). They argue for the existence of a wage curve linking local wages to local unemployment. They claim the relationship to be static. They also claim that the unemployment elasticity of pay is -0.1 across-countries. They claim that this shows that countries exhibit the same degree of wage flexibility. In this paper we study wage determination in Argentina. We believe that both regional and national factors affect wage setting. Thus, we also favor the modelization at the regional level of aggregation. However, we show that a regional wage two-way fixed effects error component model does not identify the effect of aggregate variables on wages though it controls for them. Thus, the claim that the estimated unemployment elasticity of pay in this model provides a good measure of wage flexibility may be misleading. We propose a three-step estimator that may identify the whole set of parameters of interest in a wage equation. That is, we propose a statistical procedure that may consistently estimate the coefficients of both local and aggregate variables that affect wage setting. We reject the existence of a static wage curve in favor of a dynamic regional wage equation. Additionally, we tentatively favor an error correction mechanism representation instead of a Phillips curve type representation for the common time series component of the regional wages.Departamento de Economía2000-06-02info:eu-repo/semantics/conferenceObjectinfo:eu-repo/semantics/publishedVersionObjeto de conferenciahttp://purl.org/coar/resource_type/c_5794info:ar-repo/semantics/documentoDeConferenciaapplication/pdfhttp://sedici.unlp.edu.ar/handle/10915/3661enginfo:eu-repo/semantics/altIdentifier/url/http://www.depeco.econo.unlp.edu.ar/siff/2000/trabajo2.pdfinfo:eu-repo/semantics/openAccesshttp://creativecommons.org/licenses/by/3.0/Creative Commons Attribution 3.0 Unported (CC BY 3.0)reponame:SEDICI (UNLP)instname:Universidad Nacional de La Platainstacron:UNLP2025-09-29T10:49:17Zoai:sedici.unlp.edu.ar:10915/3661Institucionalhttp://sedici.unlp.edu.ar/Universidad públicaNo correspondehttp://sedici.unlp.edu.ar/oai/snrdalira@sedici.unlp.edu.arArgentinaNo correspondeNo correspondeNo correspondeopendoar:13292025-09-29 10:49:17.606SEDICI (UNLP) - Universidad Nacional de La Platafalse
dc.title.none.fl_str_mv Wage determination in Argentina: an econometric analysis with methodology discussion
title Wage determination in Argentina: an econometric analysis with methodology discussion
spellingShingle Wage determination in Argentina: an econometric analysis with methodology discussion
Galiani, Sebastian
Ciencias Económicas
local and aggregate determinants of wages; three-step procedure; Phillips curve;error correction mechanism
econometría
Argentina
salario
title_short Wage determination in Argentina: an econometric analysis with methodology discussion
title_full Wage determination in Argentina: an econometric analysis with methodology discussion
title_fullStr Wage determination in Argentina: an econometric analysis with methodology discussion
title_full_unstemmed Wage determination in Argentina: an econometric analysis with methodology discussion
title_sort Wage determination in Argentina: an econometric analysis with methodology discussion
dc.creator.none.fl_str_mv Galiani, Sebastian
author Galiani, Sebastian
author_facet Galiani, Sebastian
author_role author
dc.subject.none.fl_str_mv Ciencias Económicas
local and aggregate determinants of wages; three-step procedure; Phillips curve;error correction mechanism
econometría
Argentina
salario
topic Ciencias Económicas
local and aggregate determinants of wages; three-step procedure; Phillips curve;error correction mechanism
econometría
Argentina
salario
dc.description.none.fl_txt_mv Micro evidence on the relationship between wages and unemployment has been provided recently in a series of contributions by Blanchflower and Oswald (1994, 1995). They argue for the existence of a wage curve linking local wages to local unemployment. They claim the relationship to be static. They also claim that the unemployment elasticity of pay is -0.1 across-countries. They claim that this shows that countries exhibit the same degree of wage flexibility. In this paper we study wage determination in Argentina. We believe that both regional and national factors affect wage setting. Thus, we also favor the modelization at the regional level of aggregation. However, we show that a regional wage two-way fixed effects error component model does not identify the effect of aggregate variables on wages though it controls for them. Thus, the claim that the estimated unemployment elasticity of pay in this model provides a good measure of wage flexibility may be misleading. We propose a three-step estimator that may identify the whole set of parameters of interest in a wage equation. That is, we propose a statistical procedure that may consistently estimate the coefficients of both local and aggregate variables that affect wage setting. We reject the existence of a static wage curve in favor of a dynamic regional wage equation. Additionally, we tentatively favor an error correction mechanism representation instead of a Phillips curve type representation for the common time series component of the regional wages.
Departamento de Economía
description Micro evidence on the relationship between wages and unemployment has been provided recently in a series of contributions by Blanchflower and Oswald (1994, 1995). They argue for the existence of a wage curve linking local wages to local unemployment. They claim the relationship to be static. They also claim that the unemployment elasticity of pay is -0.1 across-countries. They claim that this shows that countries exhibit the same degree of wage flexibility. In this paper we study wage determination in Argentina. We believe that both regional and national factors affect wage setting. Thus, we also favor the modelization at the regional level of aggregation. However, we show that a regional wage two-way fixed effects error component model does not identify the effect of aggregate variables on wages though it controls for them. Thus, the claim that the estimated unemployment elasticity of pay in this model provides a good measure of wage flexibility may be misleading. We propose a three-step estimator that may identify the whole set of parameters of interest in a wage equation. That is, we propose a statistical procedure that may consistently estimate the coefficients of both local and aggregate variables that affect wage setting. We reject the existence of a static wage curve in favor of a dynamic regional wage equation. Additionally, we tentatively favor an error correction mechanism representation instead of a Phillips curve type representation for the common time series component of the regional wages.
publishDate 2000
dc.date.none.fl_str_mv 2000-06-02
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Creative Commons Attribution 3.0 Unported (CC BY 3.0)
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