Working Paper: CEPR ID: DP16118
Authors: Andres Blanco; Bernardo Diaz de Astarloa; Andres Drenik; Christian Moser; Danilo Trupkin
Abstract: This paper studies earnings inequality and dynamics in Argentina between 1996 and 2015. Following the 2001–2002 crisis, the Argentine economy transitioned from a low- to a high-inflation regime. At the same time, the number of collective bargaining agreements increased, and minimum wage adjustments became more frequent. We document that this macroeconomic transition was associated with a persistent decrease in the dispersion of real earnings and cyclical movements in higher-order moments of the distribution of earnings changes. To understand this transition at the micro level, we estimate processes of regular wages within job spells. As the Argentine economy transitioned from low to high inflation, the monthly frequency of regular-wage adjustments almost doubled, while the distribution of regular-wage changes morphed from having a mode close to zero and being positively skewed to having a positive mode and being more symmetric.
Keywords: earnings inequality; earnings volatility; earnings mobility; wage rigidity; inflation
JEL Codes: D31; E24; E31; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| transition from low to high-inflation regime (E31) | persistent decrease in the dispersion of real earnings (E25) |
| macroeconomic transition from low to high inflation (E31) | changes in earnings distribution (D39) |
| increased collective bargaining and minimum wage adjustments (J38) | impact on the distribution of earnings (D33) |
| lower-tail dispersion of earnings changes (C46) | countercyclical dynamics (E32) |
| upper-tail dispersion of earnings changes (C46) | procyclical dynamics (E32) |
| differences in earnings dynamics between formal and informal sectors (J46) | higher volatility and lower mobility in informal sector (J46) |