Wage Policy in High Inflation Countries: The Role Indexation in Latin America During the 1980s
Author(s)
Marinakis, Andres E.
Abstract
During the 1980s, Latin America’s endemic problem of inflation worsened. In the Latin American context, the determination of wages became a disputed labor market issue. Many years of state intervention, combined with the defensive reactions of economic agents to the inflationary process, had contributed to the setting up of various complex structures for wage determination in the different countries. These hallmarks of state intervention were the introduction of minimum wages and the public administration wage policy. The purpose of this article is twofold: first, to analyze the different structures for wage indexation in order to assess the degree of flexibility that they brought to the labor market and, more widely, to the government’s policy making; and second, to evaluate the role played by wages in heterodox stabilization programs applied in high inflation economies during the second half of the 1980s.
