The Fall of Wage Flexibility

This study explores how labor markets have adjusted to temporary business cycle fluctuations since (at least) the 1990s. It focuses on how changes in macroeconomic conditions affect the evolving nature of labor-market adjustments on the other hand. The study pays particular attention to the role of low inflation and international trade in shaping labor-market adjustment. The main focus of the report is on employment, wages and informality. The report analyzes how they are affected by business cycles, and on how low inflation and the nature of external shocks affects labor market dynamics. It is organized as follows. Chapter 1 provides an overview of the cyclical macroeconomic behavior of wages in four LAC countries. Importantly, rather than examining the average cyclical pattern of wages, it focuses on the time varying patterns in the relationship between wages, employment and output. The second part of Chapter 2 studies downward wage rigidities with sectoral data. Chapter 3 moves from wages to quantitative labor-market adjustments and attempts to the answer what limits the expansion of formal employment in LAC? The chapter studies differences, similarities and linkages between formal and informal employment over the business cycle to understand the frustrating persistence of informal employment in the region. Chapter 4 takes a close look at the adjustment of formal labor markets in Northern Mexico during the United States recession of 2008-09. Chapter 5 turns our attention to the distributional costs of recessions by examining how returns to schooling fluctuate with the business cycle, and how they respond to different types of economic shocks. Chapter 6 concludes with a brief summary of the findings and some thoughts about policy implications.

Bibliographic Details

Main Authors:	Maloney, W.F., Lederman, D., Messina, J.
Format:	Report biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2011-09-15
Subjects:	ACCOUNTING, AUTOREGRESSION, AVERAGE WAGES, BARGAINING POWER, BENCHMARK, BENCHMARKS, BUSINESS CYCLE, BUSINESS CYCLES, COMPETITIVENESS, CONSUMER PRICE INDEX, CPI, CRISES, DECENTRALIZATION, DEMAND CURVE, DEVELOPED COUNTRIES, DEVELOPMENT POLICIES, DISINFLATION, EARNING, ECONOMIC ACTIVITY, ECONOMIC DOWNTURNS, ECONOMIC FLUCTUATIONS, ECONOMIC SHOCK, ECONOMIC SHOCKS, EFFICIENCY OF LABOR, ELASTICITY, EMPIRICAL STUDIES, EMPLOYEE, EMPLOYMENT, EMPLOYMENT MEASURE, EMPLOYMENT SECURITY, ENTITLEMENTS, ENVIRONMENTS, ESTIMATED PROBABILITY, EXCHANGE RATES, EXPORTS, FINANCIAL CRISIS, FIRING COSTS, FIRING RESTRICTIONS, FIRM LEVEL, FIRM PRODUCTIVITY, FIRM SIZE, FORECASTS, FORMAL SECTOR WAGES, FUTURE RESEARCH, GDP, GROWTH RATE, HOUSEHOLD SURVEY, INCOME, INCOME RISK, INCOME SHOCKS, INDEXATION, INDUSTRY WAGES, INFLATION, INFLATION RATE, INFLATION RATES, INFORMAL EMPLOYMENT, INFORMAL SECTOR, INSURANCE, INTERNATIONAL TRADE, JOB CREATION, JOB MATCHES, JOB SEEKERS, JOBS, LABOR CONTRACTS, LABOR COSTS, LABOR FORCE, LABOR INCOME, LABOR MARKET, LABOR MARKET ADJUSTMENT, LABOR MARKET INDICATOR, LABOR MARKET INSTITUTIONS, LABOR MARKET REGULATIONS, LABOR MARKET RIGIDITIES, LABOR MARKETS, LABOR POLICIES, LABOR TURNOVER, LAYOFF, LAYOFFS, MACROECONOMIC CONDITIONS, MACROECONOMIC PERFORMANCE, MACROECONOMIC POLICIES, MACROECONOMIC STABILIZATION, MACROECONOMICS, MANDATED BENEFITS, MIDDLE INCOME, MIDDLE INCOME COUNTRY, MINIMUM WAGE, MINIMUM WAGES, MONETARY POLICY, NOMINAL WAGES, OPEN ECONOMY, PREVIOUS JOB, PRIVATE SECTOR, PRIVATE SECTOR WORKERS, PRODUCTIVITY DATA, REAL WAGE, REAL WAGES, RECESSION, RECESSIONARY PERIODS, RETIREMENT, RIGID WAGES, RISK AVERSE, SAFETY, SAFETY NET, SAFETY NETS, SALARIED WORKERS, SELF EMPLOYED, SMALL BUSINESSES, TERMS OF TRADE, TROUGH, UNEMPLOYED, UNEMPLOYED WORKERS, UNEMPLOYMENT, UNEMPLOYMENT RATE, UNION DENSITY, UNSKILLED WORKERS, URBAN EMPLOYMENT, URBAN EMPLOYMENT SURVEY, WAGE ADJUSTMENT, WAGE BARGAINING, WAGE BILL, WAGE DATA, WAGE FLEXIBILITY, WAGE FLOOR, WAGE GROWTH, WAGE INCREASE, WAGE INCREASES, WAGE NEGOTIATIONS, WAGE RIGIDITIES, WAGE RIGIDITY, WORKER, WORKERS, WORKING HOURS, YOUNGER WORKERS,
Online Access:	http://documents.worldbank.org/curated/en/2011/09/16632915/fall-wage-flexibility-labor-markets-business-cycles-latin-america-caribbean-1990s https://hdl.handle.net/10986/23575
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