A new GLO Discussion Paper confirms a positive, but extremely low, pass-through between productivity and wages.
GLO Discussion Paper No. 1247, 2023
Wages and productivity in Argentinian manufacturing: A structuralist and distributional firm-level analysis – Download PDF
by Gómez, María Celeste & Virgillito, Maria Enrica
GLO Fellows María Celeste Gómez & Maria Enrica Virgillito
Author Abstract: Wages and productivity represent two of the most relevant variables to consider in economic development. Given the low productivity levels that emerging countries reveal, the accumulation of productive capabilities and a narrower dispersion across sectors would enable emerging countries to overcome the middle-income trap. Yet, this positive trend in productivity should translate into higher wages. Thus, we pose the following questions applied to a middle-income trapped country: is there a link between labour productivity and wages in the Argentine manufacturing sector? Does it differ across techno-productive classes or wage levels? Which factors affect this nexus, considering premature deindustrialisation? Using a firm-level dataset from 2010 to 2016, we perform quantile regression estimates to evaluate the link between productivity and wages across the conditional wage distribution among manufacturing firms. Based on a structural analysis, we identify the differences in these elasticities at 2-ISIC code levels and across Pavitt taxonomies. Our results confirm a positive, but extremely low, pass-through between productivity and wages in the Argentinian manufacturing firms, different across sectors according to their techno-productive capabilities, robust under different empirical strategies.
Vol. 36, Issue 2, April 2023: Journal of Population Economics (JOPE) 16 articles.
Vol. 36, Issue 1, January 2023: Journal of Population Economics (JOPE) 16 articles. https://link.springer.com/journal/148/volumes-and-issues/36-1
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