TY  - RPRT
        AU  - Agudelo, Sonia A.
AU  - Sala, Hector
        TI  - Wage Setting in the Colombian Manufacturing Industry
        PY  - 2015/Mar/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 8945
        UR  - https://www.iza.org/index.php/publications/dp8945
        AB  - 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.
        KW  - minimum wages
KW  - payroll taxes
KW  - trade openness
KW  - labor productivity
KW  - wage setting
KW  - price wedge
        ER  -