Argentina's labor markets in an era of adjustment

Abstract

The current economic crisis in Argentina is only partly the result of inappropriate domestic policies to cope with the recent external shocks. Years of inappropriate policies have damaged Argentina's economy. Even if no external shocks had occurred, the country would still have to change the structure of production. Argentina has had trouble sustaining a program of structural adjustment. Its experiences provide policymakers with some lessons in designing a sustainable program to achieve price stability and change the incentive system : a) macroeconomic and trade policies must be consistent; b) labor relations and labor market institutions must be changed including the decentralization of wage bargaining and the elimination of traditional wage policies and general government intervention; c) rigidities and restrictions on labor mobility must be eliminated, leading to less pervasive government intervention in the form of restrictive regulations and spending patterns; and d) public spending must be profoundly changed to reduce social costs during the transition period.Economic Stabilization,Banks&Banking Reform,Municipal Financial Management,Environmental Economics&Policies,Economic Theory&Research