This paper focuses on the decomposition of Colombia’s actual wages by both the ages of employees and cohorts, which differ over time. In the period 1982-2007, the paper analyses how Colombia ‘s labour system has undergone major changes. This era was marked by a demographic change that tilted the equilibrium from a relatively young to an older population. Given the presence of increasingly sophisticated machines, the effects of capital accumulation have been measured and modelled, typically replacing less-educated, younger workers relative to older and more skilled workers. As is recognised in the life-cycle hypothesis, real wages typically have a curved shape for each generation, according to which individuals normally begin their working life with low incomes and increasing debts and then obtain higher incomes and accumulate assets. In recent years, in which the Colombian economy is facing adverse external shocks, economic conditions have appeared to be slower. In terms of income inequality, this economic outcome would have adverse effects , especially on younger workers.
Department of Economics and Business, Jorge Tadeo University, Bogotá, Colombia.
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