Is the wage curve formal or informal? Evidence for Colombia

Economic Letters (2010) ,Volume 1 ,Pages 63-65

Abstract

Using microdata from the 2002–2006 Colombian Continuous Household Survey, we find an elasticity of individual wages to local unemployment rates of − 0.07. However, the elasticity for informal workers is significantly higher, a result which is consistent with efficiency wage theoretical models and relevant for regional labour market analysis in developing countries.

JEL classification: J30, J60, O17

Keywords: Wage curve, Unemployment, Formal and informal sectors

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