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Distributive and displacement effects of a coordinated wage bargaining scheme

Author

Listed:
  • Pablo Blanchard

    (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)

  • Paula Carrasco

    (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)

  • Rodrigo Ceni

    (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)

  • Cecilia Parada

    (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)

  • Sofía Santín

    (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)

Abstract
The rise in inequality in developed countries returns to the political and economic spotlight wage policies and their implications for labor markets. In developing countries, however, wage policies are one of the main instruments chosen by governments to deal with inequality and poverty. This paper aims to assess the distributive and displacement effects of a wage policy featuring a coordinated collective wage bargaining scheme and a national minimum wage. We estimate the impact on wage distribution, job displacement, and employment of this wage policy, which consists of more than two hundred sectoral minimum wages and a national minimum wage. We find that the wage policy reduces inequality in the lower tail of the wage distribution for all formal workers and affects the right bottom for male workers. This distributive effect does not align with the significant deployment effect in the bottom sectoral distribution, and this small effect fades out when we consider the entrance of new workers. Finally, when we analyze the impact on the whole distribution, we observe that for those sectors with the more left wage distribution, we find a bigger displacement effect, but again if we assess the performance of the total employment, we find null impacts.

Suggested Citation

  • Pablo Blanchard & Paula Carrasco & Rodrigo Ceni & Cecilia Parada & Sofía Santín, 2021. "Distributive and displacement effects of a coordinated wage bargaining scheme," Documentos de Trabajo (working papers) 21-26, Instituto de Economía - IECON.
    • Handle: RePEc:ulr:wpaper:dt-26-21
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    File URL: https://hdl.handle.net/20.500.12008/30935
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    References listed on IDEAS

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    Keywords

    Wage policy; Collective bargaining; Minimum wage; Formal employment;
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