%0 Report
        %A Agudelo, Sonia A.
%A Sala, Hector
        %T Wage Setting in the Colombian Manufacturing Industry
        %D 2015
        %8 2015 Mar
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 8945
        %U https://www.iza.org/index.php/publications/dp8945
        %X We show that wage setting in the Colombian manufacturing industry is not fundamentally driven by labor productivity in contrast to the standard theoretical prediction. On the contrary, internal institutional arrangements – payroll taxation, the minimum wage or the price wedge between manufacturing and consumption prices – together with a higher exposure to international trade – connected to the increasing globalization of the Colombian economy – appear as the crucial drivers. These findings lead us to question the political strategy followed to attain cost competitiveness in a context of growing exposure to international trade. Implementation of a true wage bargaining system is suggested as a critical policy target to prevent the disruptive economic consequences of the current wage setting mechanism and help rebalance the trade deficit.
        %K minimum wages
%K payroll taxes
%K trade openness
%K labor productivity
%K wage setting
%K price wedge