Wage-setting regimes and inequality: evidence from Argentina

ADRIANA GOLDSCHVARTZ (MARSHALL)

Ginebra

Congreso; 3rd Conference of the Regulating for Decent Work Network; 2013

The ?standard? institutional wage-setting regime that prevailed in Argentina from the 1950s up to the early 1990s was defined by recurrent state wage administration, and (when not banned) industry-wide and coordinated collective wage bargaining, both operating in the context of persistently high inflation. With economic liberalisation during the 1990s, inflation was controlled, state wage administration practically ceased, and collective bargaining became more fragmented, this being accompanied by rising wage inequality (Marshall, 2002). After the collapse of the liberalisation programme economic policies changed. Along with this change, during 2003-2011 some of the standard historical features of wage determination were restored, namely active state intervention via minimum wage raises and other measures, and a more centralised and coordinated collective wage bargaining. The objective of this paper is to analyse the effects of this reinstatement of the earlier institutional wage determination model on the degree of wage inequality, considering also the influence of other factors, in particular the inflation rate. According to the guiding hypothesis, the degree of wage inequality depends on economic (the inflation rate, differential productivity trends, labour market variables), and institutional factors (types of trade union and state intervention in wage setting). State wage administration, industry-wide and coordinated bargaining, and high inflation may be expected reduce the dispersion of wage increases (across industries and occupations), and ultimately to reduce the degree of wage inequality. The paper is organised as follows. After presenting the analytical model (section 1), the evolution of the economic and institutional factors affecting wages is discussed considering two distinctive periods, 2004-2007 and 2008-2011(section 2). The fact that certain of those variables (e.g. inflation) exhibit significant differences across these two periods while others do not, facilitates the analysis of the relative influence of the different independent variables on inequality trends. Next (section 3), wage inequality in the two periods is examined, using the pertinent indicators to characterise the evolution of the global degree of inequality (e.g. Gini coeffcients), and of the dispersion of wage increases (e.g. coefficients of variation). Particular attention is paid to the comparative evolution of wages of workers covered by collective bargaining and of non covered workers, and to possible mechanisms linking both. In addition, results from statistical analyses (section 5), considering a longer period along which the wage setting regime varied, are expected to highlight the respective influence of the various above mentioned independent variables on wage inequality trends. The study focuses in trends in the manufacturing sector (that adequately reflect those in the economy as a whole), for which information for the dependent and independent variables is more complete. ReferencesA. Marshall, ?Causes of rising wage inequality in the 1990s: evidence from the Argentine manufacturing sector?, in G. Indart, ed., Economic Reforms, Growth and Inequality in Latin America: Essays in Honor of Albert Berry, Ashgate Publishers, 2004.