2009
DOI: 10.1111/j.1467-9442.2008.01553.x
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Micro Foundations for Wage Flexibility: Wage Insurance at the Firm Level*

Abstract: To what extent do firms insulate their workers' wages from fluctuations in product markets? Which firm and worker attributes are associated with wage flexibility at the micro level? We first rely on Guiso, Pistaferri and Schivardi (2005) to estimate dynamic models of sales and wages, finding that in Portugal, workers' wages respond to permanent shocks on firm performance, as opposed to transitory shocks. We then explore the factors associated with wage flexibility, finding that collective bargaining and minimu… Show more

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Cited by 66 publications
(62 citation statements)
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References 35 publications
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“…However, firms use similar rules regarding the wage adjustment process. Our evidence meets the overall picture that the wages in the Portuguese labour market are highly responsive to market conditions (Cardoso and Portela, 2009). This is to say, in spite of specific rules, medium and large Portuguese firms use wages adjustment to deal with economic worsening conditions, although in different degrees.…”
Section: Empirical Findings a Wage Typologiessupporting
confidence: 80%
See 1 more Smart Citation
“…However, firms use similar rules regarding the wage adjustment process. Our evidence meets the overall picture that the wages in the Portuguese labour market are highly responsive to market conditions (Cardoso and Portela, 2009). This is to say, in spite of specific rules, medium and large Portuguese firms use wages adjustment to deal with economic worsening conditions, although in different degrees.…”
Section: Empirical Findings a Wage Typologiessupporting
confidence: 80%
“…Our empirical research draws on Portuguese linked employer-employee data (LEED), known as Quadros de Pessoal (Cardoso and Portugal, 2005;Cardoso and Portela, 2009), and examines the wage policy of 2220 medium and large sized firms which account for about 800 thousand workers and aim to identify typical wage policies that prevail in the Portuguese economy and subsequently ascertain how they interact with workplace characteristics. It refers to the year of 2009.…”
Section: Introductionmentioning
confidence: 99%
“…About a quarter of the increase in wage inequality at the bottom of the wage distribution between 1995 and 2004 can be linked to the declining share of collective contract coverage in Germany [5]. In Portugal, extensions have not avoided an increase in wage earnings at the top of the distribution, but they have been important in insuring workers' earnings against transitory fluctuations in firm-level productivity [6].…”
Section: Benefits Of Collective Contract Extensions: Impacts On Wage mentioning
confidence: 99%
“…7 We then restricted data to the manufacturing sector in the continental part of the Portuguese territory. Extensive checks on the consistency of the data were implemented following the methodology described in Cardoso & Portela (2009). Next, we trimmed the top and bottom one percent of the wages in each year to avoid problems with outliers and retained only wage-earners working full-time.…”
Section: Econometric Frameworkmentioning
confidence: 99%