Downward nominal and real wage rigidity: Survey evidence from European firms

Jan Babecký, Philip Du Caju, Theodora Kosma, Martina Lawless, Julian Messina and Tairi Room

No 182, Working Paper Research from National Bank of Belgium

Abstract: It has been well established that the wages of individual workers react little, especially downwards, to shocks that hit their employer. This paper presents new evidence from a unique survey of firms across Europe on the prevalence of downward wage rigidity in both real and nominal terms. We analyse which firm-level and institutional factors are associated with wage rigidity. Our results indicate that it is related to workforce composition at the establishment level in a manner that is consistent with related theoretical models (e.g. efficiency wage theory, insider-outsider theory). We also find that wage rigidity depends on the labour market institutional environment. Collective bargaining coverage is positively related with downward real wage rigidity, measured on the basis of wage indexation. Downward nominal wage rigidity is positively associated with the extent of permanent contracts and this effect is stronger in countries with stricter employment protection regulations

Keywords: downward nominal wage rigidity; downward real wage rigidity; wage indexation; survey data; European Union (search for similar items in EconPapers)
JEL-codes: C81 J30 J31 J32 P5 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2009-11
New Economics Papers: this item is included in nep-cba and nep-lab
References: Add references at CitEc
Citations: View citations in EconPapers (33)

Downloads: (external link)
https://www.nbb.be/doc/ts/publications/wp/wp182en.pdf (application/pdf)

Related works:
Journal Article: Downward Nominal and Real Wage Rigidity: Survey Evidence from European Firms (2010)
Working Paper: Downward nominal and real wage rigidity: survey evidence from European firms (2010)
Working Paper: Downward Nominal and Real Wage Rigidity: Survey Evidence from European Firms (2009)
Working Paper: Downward Nominal and Real Wage Rigidity: Survey Evidence from European Firms (2009)
Working Paper: Downward Nominal and Real Wage Rigidity: Survey Evidence from European Firms (2009)
Working Paper: Downward nominal and real wage rigidity:survey evidence from European firms (2009)
Working Paper: Downward nominal and real wage rigidity: survey evidence from European firms (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbb:reswpp:200911-23

Access Statistics for this paper

More papers in Working Paper Research from National Bank of Belgium Contact information at EDIRC.
Bibliographic data for series maintained by ().