The Fall of Wage Flexibility : Labor Markets and Business Cycles in Latin America and the Caribbean since the 1990s
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....
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2011/09/16632915/fall-wage-flexibility-labor-markets-business-cycles-latin-america-caribbean-1990s http://hdl.handle.net/10986/23575 |
| Summary: | 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. |
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