A survey of 184 firms was conducted to mvestIgate the reasons for wage ngidity The strongest support was found for explanations based on adverse selection in quits and on the effect of wages on effort. In addition, survey respondents mdicated that reducmg turnover IS an Important explanation of wage ngIdIty for wrute-collar workers, and that implicIt contracts are an important explanation for other workers. Respondents also belIeved that effort responds more strongly to wage decreases than to wage mcreases and that wage decreases have a greater Impact on the effort of low-skIlled workers than of hIgh-skIlled workers.