The term COLA can be used in two senses. 1) A Cost-of-Living Adjustment in which wage rates are periodically adjusted, usually upward, based upon changes in the cost of living. These are often found in collective bargaining agreements. In addition, they constitute large increases in government programs, such as social security. 2) A Cost-of-Living Allowance is a payment to an expatriate employee for differences in living costs between the host and home country of the employee.

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