Download This PaperSectoral Differences in Wage Freezes and Wage Cuts: Evidence from a New Firm Survey
40 Pages Posted: 8 Jun 2016
There are 2 versions of this paper
Sectoral Differences in Wage Freezes and Wage Cuts: Evidence from a New Firm Survey
Date Written: 2008
Abstract
The paper provides evidence concerning incidence and sources of nominal wage rigidity in services and manufacturing, using a new and large employer survey on wage and price setting behaviour for Germany. We observe that wage freezes are more frequent in services than in manufacturing, whereas wage cuts are less frequent. The significant sector gaps do not vanish after controlling for relevant firm characteristics influencing the incidence of wage freezes and wage cuts, notably coverage by collective agreements and the degree of price competition on the product market. An analysis of firms' view on the reasons preventing wage cuts suggests that specific fear of excess worker turnover could explain distinct wage setting behaviour in services.
Keywords: Nominal Wage Rigidity, Efficiency Wages, Manufacturing and Services, Germany
JEL Classification: J31
Suggested Citation: Suggested Citation
Holger Bonin
IZA Institute of Labor Economics ( email )
P.O. Box 7240
Bonn, D-53072
Germany
+49 228 3894 303 (Phone)
+49 228 3894 510 (Fax)