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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Wage Misalignment in CFA Countries: Were Labour Market Policies to Blame?
Author:Rama, MartínISNI
Year:2000
Periodical:Journal of African Economies
Volume:9
Issue:4
Period:December
Pages:475-511
Language:English
Geographic term:French-speaking Africa
Subjects:wages
employment
labour law
Economics and Trade
Labor and Employment
External link:https://jae.oxfordjournals.org/content/9/4/475.full.pdf
Abstract:Wage rigidity, stemming from highly distortive labour market policies, is a natural candidate to explain the overvaluation of the CFA franc after the adverse external shocks of the 1980s. This paper uses a variety of data to assess wage rigidity in CFA countries until the 1994 devaluation, and to analyse whether it was due to labour market policies. The paper shows that wages were high in CFA countries, compared with both wages in similar countries and the labour earnings of similar individuals within the same countries. It also shows that wages were rigid in real terms, in the sense of following closely the fluctuations of government wages and consumer prices, but it finds no evidence of nominal wage rigidity. Therefore, wage misalignment cannot be traced down to labour market policies and institutions. The paper produces evidence that minimum wages did not play a major role in obstructing the adjustment to the adverse external shocks of the 1980s. Trade unions do not appear to be at the root of wage misalignment either. The most likely candidates to explain wage misalignment and real wage rigidity in CFA countries are government pay policies and (possibly) limited competition in product markets. Bibliogr., sum.
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