The Evolution of the Earnings Distribution in a Volatile Economy: Evidence from Argentina

85 Pages Posted: 18 Feb 2021 Last revised: 9 Oct 2021

See all articles by Julio Blanco

Julio Blanco

University of Michigan at Ann Arbor - Department of Economics

Bernardo Diaz de Astarloa

Universidad Nacional de La Plata - Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS); University of Buenos Aires (UBA) - Faculty of Economic Science

Andres Drenik

The University of Texas at Austin

Christian Moser

Columbia University; Federal Reserve Bank of Minneapolis; Centre for Economic Policy Research (CEPR)

Danilo Trupkin

IIEP, Universidad de Buenos Aires-CONICET

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Date Written: October 8, 2021

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 wage adjustments 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 changes in regular wages morphed from having a mode close to zero and being positively skewed to having a positive mode and being more symmetric.

Keywords: Income Inequality, Income Volatility, Income Mobility, Wage Rigidity, Inflation

JEL Classification: D31, E24, E31, J31

Suggested Citation

Blanco, Julio and Diaz de Astarloa, Bernardo and Drenik, Andres and Moser, Christian and Trupkin, Danilo, The Evolution of the Earnings Distribution in a Volatile Economy: Evidence from Argentina (October 8, 2021). Available at SSRN: https://ssrn.com/abstract=3779632 or http://dx.doi.org/10.2139/ssrn.3779632

Julio Blanco

University of Michigan at Ann Arbor - Department of Economics ( email )

Ann Arbor, MI
United States

Bernardo Diaz de Astarloa

Universidad Nacional de La Plata - Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS) ( email )

Calle 6 e/47 y 48
La Plata, Provincia de Buenos Aires 1900
Argentina

University of Buenos Aires (UBA) - Faculty of Economic Science ( email )

Av. Córdoba 2122
Buenos Aires, C1120AAQ
Argentina

Andres Drenik

The University of Texas at Austin ( email )

United States

HOME PAGE: http://www.andresdrenik.com

Christian Moser (Contact Author)

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States
6093564653 (Phone)

HOME PAGE: http://www.economoser.com

Federal Reserve Bank of Minneapolis ( email )

90 Hennepin Avenue
Minneapolis, MN 55480
United States

HOME PAGE: http://www.economoser.com/

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Danilo Trupkin

IIEP, Universidad de Buenos Aires-CONICET ( email )

Av. Córdoba 2122
Buenos Aires, C1120AAQ
Argentina

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