A Diagnosis of Chilean Unemployment

Series Estudios Economicos y Sociales Research Paper No. RE1-04-012

76 Pages Posted: 28 Feb 2005

See all articles by Alejandro Micco

Alejandro Micco

University of Chile

Carmen Pages

Inter-American Development Bank (IADB); IZA Institute of Labor Economics

Kevin Cowan

Adolfo Ibanez University

Date Written: August 2004

Abstract

This paper examines the reasons behind the sudden increase and the slow recovery of unemployment in Chile after the economic slowdown that took place in 1998 as a result of the Asian Crisis. To do so, we analyze the response of employment and wages to this economic shock and show that Chile exhibits substantial wage rigidity. We argue that a large increase in minimum wages, pre-determined before the slowdown, and a widespread practice of negotiating inflation-indexed long-term wage contracts prevented wages from adjusting to the changing economic conditions and slowed down employment growth.

Note: Downloadable document in Spanish.

Suggested Citation

Micco, Alejandro and Pages-Serra, Carmen and Cowan, Kevin, A Diagnosis of Chilean Unemployment (August 2004). Series Estudios Economicos y Sociales Research Paper No. RE1-04-012. Available at SSRN: https://ssrn.com/abstract=674121 or http://dx.doi.org/10.2139/ssrn.674121

Alejandro Micco (Contact Author)

University of Chile ( email )

Pío Nono Nº1, Providencia
Santiago, R. Metropolitana 7520421
Chile

Carmen Pages-Serra

Inter-American Development Bank (IADB) ( email )

1300 New York Avenue, NW
Research Department
Washington, DC 20577
United States
202-623 3110 (Phone)
202-623-2481 (Fax)

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

Kevin Cowan

Adolfo Ibanez University ( email )

Santiago
Chile

Register to save articles to
your library

Register

Paper statistics

Downloads
107
Abstract Views
1,660
rank
250,152
PlumX Metrics