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Spilimbergo, Antonio.

Exchange Rates and Wages in an Integrated World Antonio Spilimbergo. [electronic resource] / Antonio Spilimbergo. - Washington, D.C. : International Monetary Fund, 2009. - 1 online resource (44 p.) - IMF Working Papers; Working Paper ; No. 09/44 . - IMF Working Papers; Working Paper ; No. 09/44 .

We analyze how the pass-through from exchange rate to domestic wages depends on the degree of integration between domestic and foreign labor markets. Using data from 66 countries over the period 1981-2005, we find that the elasticity of domestic wages to real exchange rate is 0.1 after a year for countries with high barriers to external labor mobility, but about 0.4 in countries with low barriers to mobility. The results are robust to the inclusion of various controls, different measures of exchange rates, and concepts of labor market integration. These findings call for including labor mobility in macro models of external adjustment.

ISBN: 1451871929 : 18.00 USD

ISSN: 1018-5941

Standard No.: 10.5089/9781451871920.001 doi

Subjects--Topical Terms:
Exchange Rate
Labor Market Integration
Real Exchange Rate
Wage

Subjects--Geographic Terms:
Australia
Germany
Italy
Netherlands