How Wages Change: Micro Evidence from the International Wage Flexibility Project

The Margins of Labour Cost Adjustment: Survey Evidence from European Firms

“…In the US, clear signs of resistance to nominal wage cuts are found in all studies (see among others Kahn, 1997;Altonji andDevereux, 2000, andLebow et al 2003). More recently, a comprehensive cross-country study conducted in the framework of the International Wage Flexibility Project (IWFP) has demonstrated the existence of downward rigidity in real wages in addition to nominal wages in many European countries (Dickens et al 2007(Dickens et al , 2008.…”

Optimal portfolio choice with path dependent benchmarked labor income: a mean field model

“…which is a no-borrowing-without-repayment constraint as the second term in (17) represents the agent's market value of human capital at time t. In other words, human capital can be pledged as collateral, and represents the agent's maximum borrowing capacity. We note that the agent cannot default on his/her debt upon death, as the bequest target B is nonnegative.…”

“…Here we rewrite, in a suitable infinite-dimensional setting, the problem of maximizing the functional (14) under the constraint (17) and under the transformed state equation (12). We call it 'general problem' since we consider it for generic initial data, so, not necessarily connected with our original control of McKean-Vlasov dynamics.…”

“…In line with the empirical findings and best practice, to reflect a realistic economic setting, the dynamics of labor incomes should include two main features. Firstly, labor incomes adjust slowly to financial market shocks, and income shocks have modest persistency when individuals can learn about their earning potential (see, e.g., [31], [17], [33]). This suggests that delayed dynamics may represent a very tractable way of modelling wages that adjust slowly to financial market shocks (e.g., [16], section 6).…”

“…• In Section 2 we outline the model and, in Remark 2.4, introduce the change of variable which we use to rewrite it in a more treatable form. • Section 3 is devoted to the non-trivial task of rewriting the no-borrowing constraint (see (17) below) in our case. understand what happens to admissible strategies when the boundary of the constraint set is reached, a key feature in dealing with state constraints problems.…”