Wage Rigidity: A Look Inside the Firm
28 Pages Posted: 30 Aug 1999
Date Written: April 16, 1999
Abstract
This paper tests for nominal salary rigidity using panel data from two large service-sector firms. Distributions of the firms' salary changes exhibit nominal rigidity: few nominal pay cuts, a pile-up of observations at zero, and positive skewness and asymmetry. In addition, these characteristics become more pronounced in periods of low inflation. These results are much stronger than those found in the previous literature. Further analysis shows that the sizable measurement error in the PSID and the fact that establishment surveys typically follow average wages within jobs may bias the results in the previous literature toward rejecting downward nominal wage rigidity.
JEL Classification: E24, J31
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
The Extent and Consequences of Downward Nominal Wage Rigidity
-
Does Inflation "Grease the Wheels of the Labor Market"?
By David Card and Dean Hyslop
-
Robustness and Real Consequences of Nominal Wage Rigidity
By Ernst Fehr and Lorenz Goette
-
Downward Nominal Wage Rigidity: Evidence from the Employment Cost Index
By David E. Lebow, Raven E. Saks, ...
-
Downward Nominal Wage Rigidity in Europe
By Steinar Holden and Fredrik Wulfsberg
-
How Wages Change: Micro Evidence from the International Wage Flexibility Project
By William T. Dickens, Lorenz Goette, ...
-
How Wages Change: Micro Evidence from the International Wage Flexibility Project
By William T. Dickens, Lorenz Goette, ...
-
How Wages Change: Micro Evidence from the International Wage Flexibility Project
By William T. Dickens, Lorenz Goette, ...
-
Downward Nominal Wage Rigidity in the OECD
By Steinar Holden and Fredrik Wulfsberg