Downward Nominal And Real Wage Rigidity: Survey Evidence From European Firms

Babecký, Jan; Caju, Philip Du; Κοσμά, Θεοδώρα; Lawless, Martina; Messina, Julián; Rõõm, Tairi

doi:10.1596/1813-9450-5159

Cited by 32 publications

(10 citation statements)

References 66 publications

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“…The reaction of a country's labor market to immigration should depend on its institutional features. In many European countries (compared to Canada, the United Kingdom, and the United States), wages can be downwardly rigid due to the prevalence of generous welfare state benefits, high levels of minimum wage, and employment protections and dominant collective bargaining institutions (Card et al ., ; Babecký et al ., ). If following immigration wages cannot adjust downward, the level of unemployment can be expected to rise (either through a decline in the employment of incumbent workers or because the new entrants cannot find jobs).…”

Section: Resultsmentioning

confidence: 99%

“…They tend to have a high minimum wage, high unemployment benefits, strict employment protection, and/or powerful labor unions. All these institutional dimensions should affect the wage‐setting mechanism (Babecký et al ., ), the reservation wage (Cohen, 1999), and the bargaining scope, which in turn, should have an impact on the responsiveness of wages to labor supply shocks induced by immigration.…”

Section: Empirical Evidencementioning

confidence: 99%

See 1 more Smart Citation

The Impact of Immigration on the Labor Market

Edo

2018

Journal of Economic Surveys

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The literature on the impact of immigration on the labor market is highly controversial. The aim of this paper is to review the existing literature and draw some general conclusions on how wages and employment respond to immigration. Economic studies indicate that the impact of immigration on the average wage and employment of native workers is null or slightly positive. However, because adjustments take time, the immediate labor market effects of unexpected (as opposed to expected) migration episodes can be detrimental. Immigration also can have distributional consequences. In particular, the skill composition of immigrants matters in determining their impact on native labor market outcomes. An inflow of immigrants will tend to reduce the wages of competing native workers (with skills similar to those of the migrants), and increase those of complementary workers (with skills that complement those of immigrants). By affecting the skill composition of the workforce, immigration can create winners and losers among native workers via changes in the wage structure.

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Section: Resultsmentioning

confidence: 99%

Section: Empirical Evidencementioning

confidence: 99%

The Impact of Immigration on the Labor Market

Edo

2018

Journal of Economic Surveys

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“…The topic of worker movements between labour market stages has been discussed before in the literature (Mortensen and Pissarides, 1994;Pissarides, 2000) and gross worker flows have been found to be related to business cycles (see Carrillo-Tudela and Visschers, 2013 for the USA; Bachmann, 2005 for Germany; Meriküll, 2011 for Estonia). At the same time, other adjustments besides employee lay-offs are also being made, for example, cuts in wages (Babecký et al, 2010;Rõõm and Dabušinskas, 2011) or working hours (Balleer et al, 2013) or changes in the arrangements of work content (Masso and Krillo, 2011).…”

Section: Introductionmentioning

confidence: 99%

Occupational mobility over the business cycle

Roosaar

Mõtsmees

Varblane

2014

International Journal of Manpower

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Purpose -The purpose of this paper is to examine how occupational mobility varies over the business cycle and how selected factors contribute to occupational mobility in different stages of the business cycle. Design/methodology/approach -Using annual micro data from the Estonian Labour Force Survey (2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009)(2010) and implementing probit models with interaction terms, the paper investigates occupational mobility as a change of occupation in two successive years during recovery, boom and recession periods. Findings -The analysis indicates that occupational mobility is higher during the recovery and boom periods and lower during the recession stage. The demographic characteristics (gender, marital status, knowledge of local language) influence the probability for occupational change during the recovery stage of the business cycle. The position of employees in the occupational hierarchy is significant during the recovery and boom periods. Employees working in the public sector have a lower probability for occupational change compared with private sector employees during the recession. Training has a positive effect on occupational mobility during recession. Tenure reduces the probability of occupational mobility over the whole business cycle. Originality/value -The paper contributes to the literature by providing new results about the role of different factors of occupational mobility over the business cycle. This is among the few studies addressing the variation in the occupational mobility of employees from the public and private sectors. Interactions between the position of the employees in the occupational hierarchy and the ownership form of their employers and the economic sectors add to the understanding about the mechanism of occupational mobility over the business cycle stages.

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“…The empirical literature on the factors that explain the importance of downward nominal and/or real wage rigidity is quite extensive. The models in this field typically regress a measure of downward nominal or real wage rigidity, computed at the firm, sectoral or country level, on a number of variables the theory suggests as potentially important to explain such differences (see, among others, Babecky et al ., ; Caju et al ., ; Dickens et al ., ; Holden and Wulfsberg, ; Messina et al ., ). Information on wage freezes has been used as a measure of the degree of downward nominal wage rigidity in a number of papers.…”

Section: Assessing Nominal Wage Rigiditymentioning

confidence: 99%

“…According to these models (among the most popular, Akerlof and Yellen, ; Shapiro and Stiglitz, ; Stiglitz, ; Weiss, ) wages are more rigid for highly skilled/white‐collar workers and for those with high tenure and/or a permanent contract. This outcome finds some support in empirical studies (Babecky et al ., ; Caju et al ., ; Campbell and Kamlani, ).…”

mentioning

confidence: 99%

What Survey Data Reveal about Price and Wage Rigidity in Portugal

Martins

2015

Labour

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This paper exploits the information collected from a survey conducted on a sample of Portuguese firms to study the patterns of firms’ price and wage adjustments and the extent of nominal price and wage rigidities. The evidence shows that the frequency of price changes varies substantially across sectors and depends on the intensity of competition, the share of labor costs and firms’ price reviewing behavior. The results also suggest that the constraint imposed by the presence of downward nominal wage rigidity is less important in firms where the fraction of permanent and high‐skilled workers is lower and the share of flexible pay components is higher.

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Downward Nominal And Real Wage Rigidity: Survey Evidence From European Firms

Cited by 32 publications

References 66 publications

The Impact of Immigration on the Labor Market

The Impact of Immigration on the Labor Market

Occupational mobility over the business cycle

What Survey Data Reveal about Price and Wage Rigidity in Portugal

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