Wage differences in Latin American cities: Bogotá, Buenos Aires, Mexico City and Santiago de Chile

Abstract

This paper has the objective to explore the wages performance in the cities of Bogota, Buenos Aires, Mexico City and Santiago, in the last ten years, and to identify what factors influence their variation, as well as what the wage differences in these cities and to what extent they can explain inequality patterns through changes in wages. To accomplish this purpose, it explores the main theories about wages, with emphasis on studies on effective demand in imperfect markets on Michal Kalecki’s. Also, it uses statistical information from each city to describe trends and relationships. With this double analysis, theoretical and empirical, it is found that movements in real wages are due to political considerations, as a result of changes in labor productivity, the employment rate and the level of concentration of economic activities, which shows that urban labor markets in the region are
heterogeneous.