Abstract:
I study trends in real wages in Argentina for the 2002-2023 period using time series data sources. I estimate a dynamic wage equation to unpack the short- and long-run relationships during the period of exchange rate controls (2011-2015; 2019-2023). I find that in the long-run, exchange regulations reduce real wages by 9.1%. Interestingly, in the short-run, the effect is only significant through the fiscal policy, with a shift of -5.8%. Simulation results show that a stabilization program of the public expenditure in conjunction with the removal of regulations would improve real wages. The pace of recovery will ultimately depend on the credibility of the program, extent of labour market frictions (e.g. minimum wages, powerful trade unions) and the size of the informal economy.
Suggested citation
Caram, Santiago, Exchange Rate Regulations and Labour Market Performance: Evidence for Argentina (2025). Available at SSRN: http://dx.doi.org/10.2139/ssrn.5403932
