Sanz-de-Galdeano, AnnaMessina, Julian2012-03-192012-03-192011-10-01https://hdl.handle.net/10986/3629This paper examines the consequences of rapid disinflation for downward wage rigidities in two emerging countries, Brazil and Uruguay, relying on high quality matched employer-employee administrative data. Downward nominal wage rigidities are more important in Uruguay, while wage indexation is dominant in Brazil. Two regime changes are observed during the sample period, 1995-2004: (i) in Uruguay wage indexation declines, while workers' resistance to nominal wage cuts becomes more pronounced; and (ii) in Brazil, the introduction of inflation targeting by the Central Bank in 1999 shifts the focal point of wage negotiations from changes in the minimum wage to expected inflation. These regime changes cast doubts on the notion that wage rigidity is structural in the sense of Lucas (1976).CC BY 3.0 IGOADVERSE SELECTIONAGED WORKERSAGRICULTUREBARGAINING POWERBASE YEARBENCHMARKBUSINESS CYCLESCENTRAL BANKCPIDECENTRALIZATIONDEVELOPED COUNTRIESDEVELOPMENT ECONOMICSDEVELOPMENT POLICYDISINFLATIONDOWNWARD BIASEARNINGECONOMIC ACTIVITYEDUCATIONAL ATTAINMENTEFFICIENCY WAGESEMPIRICAL ANALYSISEMPIRICAL EVIDENCEEMPLOYEEEMPLOYMENTEQUILIBRIUM UNEMPLOYMENTESTIMATED PROBABILITYEXPECTED WAGEFIRM LEVELFISHINGFORECASTSFORESTRYFUTURE RESEARCHGROWTH RATEHUMAN CAPITALINCOMEINCOME COUNTRIESINDEXATIONINFLATION RATEINFLATION RATESJOBSLABOR CONTRACTLABOR CONTRACTSLABOR COSTLABOR ECONOMICSLABOR FORCELABOR MARKETLABOR MARKET INSTITUTIONSLABOR MARKETSLABOR TURNOVERLAYOFFSMACROECONOMIC EFFECTSMACROECONOMIC STABILIZATIONMACROECONOMICSMENU COSTSMINIMUM WAGEMINIMUM WAGESMONETARY POLICYNOMINAL WAGESOCCUPATIONPAYING JOBPOLICY ENVIRONMENTPOLITICAL ECONOMYPREVIOUS DISCUSSIONPREVIOUS SECTIONPREVIOUS STUDIESPRICE CHANGESPRICE SETTINGPRIVATE SECTORPRIVATE SECTOR WORKERSPRODUCTIVITYREAL GDPREAL WAGESALARYSEVERANCE PAYMENTSTAXABLE INCOMETROUGHUNEMPLOYMENTUNION DENSITYWAGE BARGAININGWAGE DATAWAGE DETERMINATIONWAGE DISTRIBUTIONWAGE FLEXIBILITYWAGE GROWTHWAGE INCREASEWAGE INCREASESWAGE LEVELWAGE LEVELSWAGE NEGOTIATIONSWAGE RIGIDITIESWAGE RIGIDITYWHITE COLLAR WORKERWHITE COLLAR WORKERSWORKERWORKERSYOUNG WORKERSYOUNGER WORKERSWorld Bank10.1596/1813-9450-5863