Downward Nominal and Real Wage Rigidity : Survey Evidence from European Firms
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...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2009/12/11561636/downward-nominal-real-wage-rigidity-survey-evidence-european-firms http://hdl.handle.net/10986/19955 |
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okr-10986-199552021-04-23T14:03:52Z Downward Nominal and Real Wage Rigidity : Survey Evidence from European Firms Babecky, Jan Du Caju, Philip Kosma, Theodora Lawless, Martina Messina, Julian Room, Tairi ADVERSE SELECTION ASYMMETRIC INFORMATION BARGAINING AGREEMENT BARGAINING POWER BUSINESS CYCLE CENTRAL BANKS COLLECTIVE AGREEMENTS COLLECTIVE BARGAINING COMPETITIVE PRESSURE CONTRACTUAL WAGES ECONOMIC SHOCKS ECONOMICS EFFICIENCY WAGE THEORIES EFFICIENCY WAGE THEORY EMPIRICAL STUDIES EMPLOYMENT EMPLOYMENT OUTLOOK EMPLOYMENT PROTECTION LEGISLATION ENVIRONMENTS EQUILIBRIUM UNEMPLOYMENT FAIR FIRING COSTS FIRM LEVEL FIRM SIZE FIRM SURVEY GAME THEORY HOUSEHOLD SURVEY HOUSEHOLD SURVEYS HUMAN CAPITAL IMPLICIT CONTRACTS INCOME LEVEL INDEXATION INFLATION INSURANCE JOB LOSS JOBS LABOR CONTRACTS LABOR ECONOMICS LABOR MARKET LABOR MARKETS LABOR TURNOVER LABOUR LABOUR COST LABOUR COSTS LABOUR MARKET LABOUR MARKET CHARACTERISTICS LABOUR MARKET INSTITUTIONS LABOUR MARKETS LABOUR REGULATIONS LABOUR UNIONS LABOUR-INTENSIVE TECHNOLOGIES LAYOFFS MARKET COMPETITION MONETARY POLICY MOTIVATION NOMINAL WAGES OCCUPATION PERMANENT WORKERS POLITICAL ECONOMY PRESENT STUDY PRICE CHANGE PRICE COMPETITION PRICE LEVEL PRICE SETTING PRICE STABILITY PRIVATE SECTOR PRODUCT MARKET PRODUCT MARKET COMPETITION PRODUCTION TECHNOLOGY PRODUCTIVITY REAL INCOME REAL WAGE REAL WAGES RENTS REPLACEMENT COSTS RETIREMENT RIGID WAGES SKILL GROUPS SKILLED WORKERS SMALL MANUFACTURING TEMPORARY WORKERS THEORETICAL MODELS TOTAL WAGE TOTAL WAGES TRADE UNIONS UNEMPLOYMENT UNEMPLOYMENT INSURANCE UNION DENSITY UNION MEMBERSHIP UNION MEMBERSHIP RATES WAGE ADJUSTMENT WAGE BARGAINING WAGE BILL WAGE DETERMINATION WAGE FLEXIBILITY WAGE INCREASES WAGE LEVEL WAGE LEVELS WAGE NEGOTIATION WAGE NEGOTIATIONS WAGE RIGIDITIES WAGE RIGIDITY WAGES WORKER 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. The authors analyse which firm-level and institutional factors are associated with wage rigidity. The 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). The analysis also finds 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. 2014-09-02T21:45:09Z 2014-09-02T21:45:09Z 2009-12 http://documents.worldbank.org/curated/en/2009/12/11561636/downward-nominal-real-wage-rigidity-survey-evidence-european-firms http://hdl.handle.net/10986/19955 English en_US Policy Research Working Paper;No. 5159 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Europe and Central Asia Europe |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ADVERSE SELECTION ASYMMETRIC INFORMATION BARGAINING AGREEMENT BARGAINING POWER BUSINESS CYCLE CENTRAL BANKS COLLECTIVE AGREEMENTS COLLECTIVE BARGAINING COMPETITIVE PRESSURE CONTRACTUAL WAGES ECONOMIC SHOCKS ECONOMICS EFFICIENCY WAGE THEORIES EFFICIENCY WAGE THEORY EMPIRICAL STUDIES EMPLOYMENT EMPLOYMENT OUTLOOK EMPLOYMENT PROTECTION LEGISLATION ENVIRONMENTS EQUILIBRIUM UNEMPLOYMENT FAIR FIRING COSTS FIRM LEVEL FIRM SIZE FIRM SURVEY GAME THEORY HOUSEHOLD SURVEY HOUSEHOLD SURVEYS HUMAN CAPITAL IMPLICIT CONTRACTS INCOME LEVEL INDEXATION INFLATION INSURANCE JOB LOSS JOBS LABOR CONTRACTS LABOR ECONOMICS LABOR MARKET LABOR MARKETS LABOR TURNOVER LABOUR LABOUR COST LABOUR COSTS LABOUR MARKET LABOUR MARKET CHARACTERISTICS LABOUR MARKET INSTITUTIONS LABOUR MARKETS LABOUR REGULATIONS LABOUR UNIONS LABOUR-INTENSIVE TECHNOLOGIES LAYOFFS MARKET COMPETITION MONETARY POLICY MOTIVATION NOMINAL WAGES OCCUPATION PERMANENT WORKERS POLITICAL ECONOMY PRESENT STUDY PRICE CHANGE PRICE COMPETITION PRICE LEVEL PRICE SETTING PRICE STABILITY PRIVATE SECTOR PRODUCT MARKET PRODUCT MARKET COMPETITION PRODUCTION TECHNOLOGY PRODUCTIVITY REAL INCOME REAL WAGE REAL WAGES RENTS REPLACEMENT COSTS RETIREMENT RIGID WAGES SKILL GROUPS SKILLED WORKERS SMALL MANUFACTURING TEMPORARY WORKERS THEORETICAL MODELS TOTAL WAGE TOTAL WAGES TRADE UNIONS UNEMPLOYMENT UNEMPLOYMENT INSURANCE UNION DENSITY UNION MEMBERSHIP UNION MEMBERSHIP RATES WAGE ADJUSTMENT WAGE BARGAINING WAGE BILL WAGE DETERMINATION WAGE FLEXIBILITY WAGE INCREASES WAGE LEVEL WAGE LEVELS WAGE NEGOTIATION WAGE NEGOTIATIONS WAGE RIGIDITIES WAGE RIGIDITY WAGES WORKER |
| spellingShingle |
ADVERSE SELECTION ASYMMETRIC INFORMATION BARGAINING AGREEMENT BARGAINING POWER BUSINESS CYCLE CENTRAL BANKS COLLECTIVE AGREEMENTS COLLECTIVE BARGAINING COMPETITIVE PRESSURE CONTRACTUAL WAGES ECONOMIC SHOCKS ECONOMICS EFFICIENCY WAGE THEORIES EFFICIENCY WAGE THEORY EMPIRICAL STUDIES EMPLOYMENT EMPLOYMENT OUTLOOK EMPLOYMENT PROTECTION LEGISLATION ENVIRONMENTS EQUILIBRIUM UNEMPLOYMENT FAIR FIRING COSTS FIRM LEVEL FIRM SIZE FIRM SURVEY GAME THEORY HOUSEHOLD SURVEY HOUSEHOLD SURVEYS HUMAN CAPITAL IMPLICIT CONTRACTS INCOME LEVEL INDEXATION INFLATION INSURANCE JOB LOSS JOBS LABOR CONTRACTS LABOR ECONOMICS LABOR MARKET LABOR MARKETS LABOR TURNOVER LABOUR LABOUR COST LABOUR COSTS LABOUR MARKET LABOUR MARKET CHARACTERISTICS LABOUR MARKET INSTITUTIONS LABOUR MARKETS LABOUR REGULATIONS LABOUR UNIONS LABOUR-INTENSIVE TECHNOLOGIES LAYOFFS MARKET COMPETITION MONETARY POLICY MOTIVATION NOMINAL WAGES OCCUPATION PERMANENT WORKERS POLITICAL ECONOMY PRESENT STUDY PRICE CHANGE PRICE COMPETITION PRICE LEVEL PRICE SETTING PRICE STABILITY PRIVATE SECTOR PRODUCT MARKET PRODUCT MARKET COMPETITION PRODUCTION TECHNOLOGY PRODUCTIVITY REAL INCOME REAL WAGE REAL WAGES RENTS REPLACEMENT COSTS RETIREMENT RIGID WAGES SKILL GROUPS SKILLED WORKERS SMALL MANUFACTURING TEMPORARY WORKERS THEORETICAL MODELS TOTAL WAGE TOTAL WAGES TRADE UNIONS UNEMPLOYMENT UNEMPLOYMENT INSURANCE UNION DENSITY UNION MEMBERSHIP UNION MEMBERSHIP RATES WAGE ADJUSTMENT WAGE BARGAINING WAGE BILL WAGE DETERMINATION WAGE FLEXIBILITY WAGE INCREASES WAGE LEVEL WAGE LEVELS WAGE NEGOTIATION WAGE NEGOTIATIONS WAGE RIGIDITIES WAGE RIGIDITY WAGES WORKER Babecky, Jan Du Caju, Philip Kosma, Theodora Lawless, Martina Messina, Julian Room, Tairi Downward Nominal and Real Wage Rigidity : Survey Evidence from European Firms |
| geographic_facet |
Europe and Central Asia Europe |
| relation |
Policy Research Working Paper;No. 5159 |
| description |
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. The authors analyse which firm-level
and institutional factors are associated with wage rigidity.
The 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). The analysis also
finds 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. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Babecky, Jan Du Caju, Philip Kosma, Theodora Lawless, Martina Messina, Julian Room, Tairi |
| author_facet |
Babecky, Jan Du Caju, Philip Kosma, Theodora Lawless, Martina Messina, Julian Room, Tairi |
| author_sort |
Babecky, Jan |
| title |
Downward Nominal and Real Wage Rigidity : Survey Evidence from European Firms |
| title_short |
Downward Nominal and Real Wage Rigidity : Survey Evidence from European Firms |
| title_full |
Downward Nominal and Real Wage Rigidity : Survey Evidence from European Firms |
| title_fullStr |
Downward Nominal and Real Wage Rigidity : Survey Evidence from European Firms |
| title_full_unstemmed |
Downward Nominal and Real Wage Rigidity : Survey Evidence from European Firms |
| title_sort |
downward nominal and real wage rigidity : survey evidence from european firms |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2009/12/11561636/downward-nominal-real-wage-rigidity-survey-evidence-european-firms http://hdl.handle.net/10986/19955 |
| _version_ |
1764444151098638336 |