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. 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 in wage fixing, 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 to 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. The analytical model is presented in section 1. Next, the characteristics of wage-setting regimes in Argentina, starting in the 1950s, and their wage outcomes are briefly reviewed, considering two distinctive periods in terms of macroeconomic strategies and associated institutional factors influencing wage inequality: the long stage lasting from the 1950s to 1990, and the 1990s (section 2). In section 3, the main features defining wage setting during 2003-2011 are discussed. Focusing in this latter period, the evolution of wages and inequality is examined in section 4, while the degree of dispersion of wage increases across industries as well as the influence of explanatory factors on differential wage growth are discussed in section 5. The study centers in the manufacturing sector, for which information for the dependent and certain independent variables is more complete.