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Wage Rigidities in Mexico: Evidence from the Administrative Records of the Mexican Social Security Institute (Instituto Mexicano del Seguro Social)

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  • Castellanos Pascacio Sara Gabriela
  • García Verdú Rodrigo
  • Kaplan David

Abstract

We analyze the existence and magnitude of downward nominal wage rigidities in the Mexican labor market. We use data from the administration records of the Instituto Mexicano del Seguro Social (IMSS). These records form a firm level panel data, which allows to follow workers employed in the same firm, and the nominal wage changes they experience through time. We estimate the nominal wage changes density functions, do some standard tests proposed in the literature of the presence of nominal wage rigidities, and extend some of these tests to take into account the presence of minimum wages, and its effect on wage change distribution.

Suggested Citation

  • Castellanos Pascacio Sara Gabriela & García Verdú Rodrigo & Kaplan David, 2004. "Wage Rigidities in Mexico: Evidence from the Administrative Records of the Mexican Social Security Institute (Instituto Mexicano del Seguro Social)," Working Papers 2004-03, Banco de México.
    • Handle: RePEc:bdm:wpaper:2004-03
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    File URL: https://www.banxico.org.mx/publicaciones-y-prensa/documentos-de-investigacion-del-banco-de-mexico/%7BA0A300AF-31E8-11EA-8D8C-5A3DB2BCAE65%7D.pdf
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    Cited by:

    1. Anete Pajuste & Hernán Ruffo, 2017. "Wage rigidity and workers’ flows during recessions," SSE Riga/BICEPS Research Papers 4, Baltic International Centre for Economic Policy Studies (BICEPS);Stockholm School of Economics in Riga (SSE Riga).
    2. Yothin Jinjarak & Kanda Naknoi, 2010. "Real Exchange Rate Fluctuations, Wage Stickiness and Tradability," Purdue University Economics Working Papers 1255, Purdue University, Department of Economics.
    3. Bosch, Mariano & Manacorda, Marco, 2008. "Minimum wages and earnings inequality in urban Mexico. Revisiting the evidence," LSE Research Online Documents on Economics 19561, London School of Economics and Political Science, LSE Library.
    4. Luca Gambetti & Julián Messina, 2018. "Evolving Wage Cyclicality in Latin America," The World Bank Economic Review, World Bank, vol. 32(3), pages 709-726.
    5. David Fairris & Gurleen Popli & Eduardo Zepeda, 2008. "Minimum Wages and the Wage Structure in Mexico," Review of Social Economy, Taylor & Francis Journals, vol. 66(2), pages 181-208.
    6. Tropeano, Domenica & Michetti, Elisabetta, 2008. "Exchange rate policy and income distribution in an open developing economy," MPRA Paper 6642, University Library of Munich, Germany.
    7. George A. Akerlof, 2007. "The Missing Motivation in Macroeconomics," American Economic Review, American Economic Association, vol. 97(1), pages 5-36, March.
    8. Michael W. L. Elsby & Gary Solon, 2019. "How Prevalent Is Downward Rigidity in Nominal Wages? International Evidence from Payroll Records and Pay Slips," Journal of Economic Perspectives, American Economic Association, vol. 33(3), pages 185-201, Summer.
    9. Iregui-Bohórquez, Ana María & Melo-Becerra, Ligia Alba & Ramírez-Giraldo, María Teresa, 2011. "Rigideces de los salarios a la baja en Colombia : evidencia empírica a partir de una muestra de salarios a nivel de firma," Chapters, in: López Enciso, Enrique & Ramírez Giraldo, María Teresa (ed.), Formación de precios y salarios en Colombia T.2, volume 2, chapter 18, pages 757-797, Banco de la Republica de Colombia.
    10. Pratap, Sangeeta & Quintin, Erwan, 2011. "Financial crises and labor market turbulence," Journal of Monetary Economics, Elsevier, vol. 58(6), pages 601-615.
    11. D. Lederman & W.F. Maloney & J. Messina, 2011. "The Fall of Wage Flexibility," World Bank Publications - Reports 23575, The World Bank Group.
    12. Naknoi, Kanda, 2008. "Real exchange rate fluctuations, endogenous tradability and exchange rate regimes," Journal of Monetary Economics, Elsevier, vol. 55(3), pages 645-663, April.
    13. Juli?n Messina & Anna Sanz-de-Galdeano, 2014. "Wage Rigidity and Disinflation in Emerging Countries," American Economic Journal: Macroeconomics, American Economic Association, vol. 6(1), pages 102-133, January.
    14. Todd Kumler & Eric Verhoogen & Judith Frías, 2020. "Enlisting Employees in Improving Payroll Tax Compliance: Evidence from Mexico," The Review of Economics and Statistics, MIT Press, vol. 102(5), pages 881-896, December.
    15. Barno Blaes, 2008. "Abwärtsnominal- und Tariflohnstarrheit in Deutschland," Working Papers 049, Bavarian Graduate Program in Economics (BGPE).
    16. Nicolas Melissas, 2007. "The Trader, the Market Maker, his Guru and her Information," Working Papers 0702, Centro de Investigacion Economica, ITAM.
    17. Christoph Knoppik & Thomas Beissinger, 2009. "Downward nominal wage rigidity in Europe: an analysis of European micro data from the ECHP 1994–2001," Empirical Economics, Springer, vol. 36(2), pages 321-338, May.
    18. Ana María Iregui B. & Ligia Alba Melo B. & María Teresa Ramírez G., 2009. "Are wages rigid in Colombia?: Empirical evidence based on a sample of wages at the firm level," Borradores de Economia 571i, Banco de la Republica de Colombia.
    19. Laura Juarez & Daniel Casarin de la Cabada, 2018. "Downward Wage Rigidities in the Mexican Labor Market: 1996–2011," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2018), pages 129-180, November.
    20. Kaplan, David S. & Piedra, Eduardo & Seira, Enrique, 2011. "Entry regulation and business start-ups: Evidence from Mexico," Journal of Public Economics, Elsevier, vol. 95(11), pages 1501-1515.
    21. Barno Blaes, 2008. "Ausmaß und reale Konsequenzen nach unten starrer Nominallöhne," Working Papers 048, Bavarian Graduate Program in Economics (BGPE).
    22. David Kaplan & Eduardo Piedra & Enrique Seira, 2006. "Are Burdensome Registration Procedures an Important Barrier on Firm Creation? Evidence from Mexico," Discussion Papers 06-013, Stanford Institute for Economic Policy Research.
    23. Kaplan, David S. & Gonzalez, Gabriel Martinez & Robertson, Raymond, 2007. "Mexican employment dynamics : evidence from matched firm-worker data," Policy Research Working Paper Series 4433, The World Bank.

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    More about this item

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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