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What Type of Contracts Underlie Aggregate Wage Dynamics?
Author:
Mr. Esteban Jadresic
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Series:
IMF Working Papers
Volume/Issue:
Volume 1997: Issue 067
Language:
English
Publication Date:
01 May 1997
DOI:
https://doi.org/10.5089/9781451961621.001
ISBN:
9781451961621
ISSN:
1018-5941
Pages:
29
Keywords:
WP; wage negotiations; aggregate wage; contract structure; Phillips curve; Wages; Contracts; Chile; wage contract; contracts type; government wage policy; Real wages; Wage adjustments; Wage bargaining; Inflation
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper shows that it is possible to estimate the importance of different types of wage contracts at the aggregate level using the same data used to estimate standard Phillips curves. It finds that the behavior of the Chilean private aggregate wage during the 1980s is well described by two-year contracts that are revised every six months according to 100 percent of past inflation. The estimates also show that the unemployment rate was a strong determinant of the contract’s target real wage and that most wage negotiations were carried through during the first half of every year. The results prove robust to a variety of tests and fit the data better than standard Phillips curves.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 1997: Issue 067