Descriptive Study on Intergenerational Real Wages, Technological Change, and Economic Growth in Colombia

This paper focuses on the decomposition of real wages in Colombia both by workers’ ages and by
cohorts, which overlap over time. The paper analyses how the Colombia’s labour structure has
undergone important changes in the period 1982-2007. This period has been characterized by a
demographic transition that has tilted the balance from a relatively young population to an older one.
The effects of capital accumulation have been estimated and modelled considering the presence of
ever more sophisticated machinery, usually replacing less-skilled, younger workers, in relation to older
and more qualified ones. In general real wages present a curved shape for each generation, as is
acknowledged in the life-cycle hypothesis, according to which people generally start their working life
with low incomes and rising debts and then obtain higher income and accumulate assets. For the
most recent years, for which the Colombian economy faces unfavourable external shocks, the
dynamics of the economy would tend to be slower. This economic result would have adverse effects
in terms of income inequalities, especially against younger workers.