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Determining factors of private sector salaries in Ecuador for the year 2014: A case study in the city of Guayaquil

Abstract:

In Ecuador, wage compensation for private sector workers has become a difficult problem to deal with and conciliate throughout history. The current Ecuadorean Constitution approved in Montecristi in 2008 strongly protects labour rights; however, many companies do not obey the law. This study investigates the variables that are significant to address private-sector wages in Guayaquil city. An analysis of the results in the previous literature and a review by Mincer (1974) suggest these variables: years of work experience, education, gender of the employee, position, seniority in the company, and marital status. Interactive and quadratic variables were also included. The inference methodology selected was ordinary least squares (OLS) with robust standard errors of White, and taking into account the sample bias correction proposed by Heckman (1979). The results show that the significant variables concerning human capital depend on the type of company they are working for and its interaction with other variables. Thus, empirical evidence was found to support that small companies are not paying their labour force in terms of productivity, specifically to new employees.