Exceptional Argentina Di Tella, Glaeser and Llach - Thomas Piketty

There has also been some discussion in the literature about the distributive impact of
minimum wage levels and their change. The minimum wage was an important
variable bargained over by government and unions in the inflationary 1980s because
it constituted a centralized device for recouping the erosion of price increases on the
purchasing power of wages. In that sense, it is likely that through this channel
increases in the minimum wage had an equalizing effect. The low inflation rates in
1993-2001 implied a loss of relevance of the minimum wage, which was fixed in
nominal terms at a low level from August 1993 to June 2003, and largely not binding
over most of the period. The minimum wage increased substantially from July 2003,
coinciding with the recovery of the economy, and it probably had an equalizing effect
over the recovery period.
The partial review of the previous paragraphs shows that the distributional impact of
labor policies and reform during the 1990s is not a settled issue. Most of the measures
were qualified as anti-labor, and the increase in employment and efficiency that
justified them failed to materialize in many cases. However, disentangling the effect
of each policy from that of concurrent reforms in the labor market and elsewhere
might prove impossible.
The Argentine labor market (and political landscape) has been characterized by the
presence of strong, industry wide unions, which played a significant role in shaping
the country’s social, economic and political outlook, mainly through their relation
with the Peronist party. Despite the importance of unions in the Argentine economy,
there is only limited empirical evidence on their impact on wages and income, mostly
because of data availability issues. 30
There is a broad consensus about the inequality-reducing effects of the first Perón
government’s pro-labor policies, in which the previous (relatively scattered) unions
were centralized and greatly strengthened. 31 From the 1940s to the 1950s union
membership increased markedly, from 30 percent to 51-65 percent for manufacturing
workers, and from 24 to 38-41 percent for non-agricultural workers (Marshall, 2005).
After this initial consolidation of large unions, it is highly likely that unions also had
an overall equalizing effect in the 1950-1970 period, as in more advanced economies.
The low levels of informality and high levels of union membership warranted a large
fraction of beneficiaries from union activities, and the presence of high tariffs implied
30 The EPH, an otherwise fine labor force survey, has never routinely collected information on union
membership.
31 The overall distributive effect of unions depends on the characteristics of union members, which is an
empirical question. Membership premia might have equalizing effects if members are unskilled, low
income workers, while the contrary is also possible if members are mostly skilled or semi-skilled. This
is especially relevant in latter periods, with a labor force characterized by higher levels of informal
workers.