Search

In this paper, we study wage convergence and flexibility in the labour market of Argentinean provinces. We first review historical determinants and propose a theoretical interpretation: the higher the level of convergence in wages, the lower the convergence in employment and eventually in the product level, because of the low competitiveness of the Interior Area, which conspires, via a restriction of the balance of payments, against their growth. Then, we empirically analyze wage convergence and the degree of wage flexibility in provincial labour markets for the period 1997-2013. We find evidence of real wage convergence and low wage flexibility. This indicates that wages do not depend on provincial factors such as labour productivity or local unemployment but on national determinants such as centralized wage agreements. [ABSTRACT FROM AUTHOR]