Real and nominal wage rigidities in collective bargaining agreements

Christofides, Louis N.; Nearchou, Paris

doi:10.1016/j.labeco.2007.04.002

Cited by 12 publications

(9 citation statements)

References 25 publications

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“…2 Several studies draw inference about rigidities from asymmetries in the wage change distribution (see Card and Hyslop 1997;Dickens et al 2007). A second group of estimates are based on the assumption that, in the absence of changes in the extent of rigidity, the shape of the wage change distribution is constant over time (see Kahn [1997] and Christofides and Nearchou [2007] for an extension to study DRWR). An alternative is proposed by Altonji and Devereux (2000), who develop a model of wage changes where DNWR and measurement error parameters are jointly estimated using maximum likelihood.…”

Section: Methodology and Datamentioning

confidence: 99%

The Incidence of Nominal and Real Wage Rigidity: An Individual-Based Sectoral Approach

Messina

Duarte

Izquierdo

et al. 2010

Journal of the European Economic Association

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The incidence of nominal and real wage rigidity: an individual-based sectoral approach ECB Working Paper, No. 1213 Provided in Cooperation with: European Central Bank (ECB)Suggested Citation: Messina, Julián; Du Caju, Philip; Izquierdo, Mario; Duarte, Cláudia Filipa; Hansen, Niels Lynggård (2010) : The incidence of nominal and real wage rigidity: an individualbased sectoral approach, ECB Working Paper, No. 1213 Abstract 4 Non-technical summary 5 NOTE: This Working Paper should not be reported as representing the views of the European Central Bank (ECB). The views expressed are those of the authors and do not necessarily reflect those of the ECB. WO R K I N G PA PE R S E R I E S N O 1213 / J U N E

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Section: Methodology and Datamentioning

confidence: 99%

The Incidence of Nominal and Real Wage Rigidity: An Individual-Based Sectoral Approach

Messina

Duarte

Izquierdo

et al. 2010

Journal of the European Economic Association

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“…The method used in allows for variation in dispersion across years, but it involves the approximation that the density function is linear over the range relevant for wage rigidity-again an assumption that does not hold in our case. Recently, Christofides and Nearchou (2006) have suggested an extension of the Kahn method with much less restrictive assumptions. However, this method seems difficult to adapt to tests of wage rigidity at several different thresholds, not only at zero, which is important in our setting.…”

Section: Empirical Approachmentioning

confidence: 99%

How Strong is the Case for Downward Real Wage Rigidity?

Holden

Wulfsberg

2007

SSRN Journal

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This paper explores the existence of downward real wage rigidity (DRWR) in 19 OECD countries, over the period 1973-1999, using data for hourly nominal earnings at the industry level. Based on a nonparametric statistical method, which allows for country-and yearspecific variation in both the median and the dispersion of industry wage changes, we find evidence of some DRWR in OECD countries overall, as well as for specific geographical regions and time periods. There is some evidence that real wage cuts are less prevalent in countries with strict employment protection legislation and high union density. Generally, we find stronger evidence for downward nominal wage rigidity than for downward real wage rigidity.

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“…However, the level of wage bargaining is often considered to be exogenous and few details are available on the content of wage agreements. Another strand of the literature looks at the determinants of firmlevel agreements in Canada and in the United States, emphasizing the role played by inflation or indexation clauses on bargained wage adjustments (see, for instance, Christofides and Wilton, 1983, Christofides and Stengos, 2003, Rich and Tracy, 2004and Christofides and Nearchou, 2007. Our contribution is to focus on a European country and to provide new results on wage floor adjustments contained in industry-level wage agreements.…”

Section: Introductionmentioning

confidence: 99%

The Impact of the National Minimum Wage on Industry-Level Wage Bargaining in France

2016

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Abstract:This paper examines empirically how industry-level wage floors are set in French industrylevel wage agreements and how the national minimum wage (NMW) interacts with industrylevel wage bargaining. For this, we use a unique dataset containing about 48,000 occupationspecific wage floors, in more than 340 French industries over the period [2006][2007][2008][2009][2010][2011][2012][2013][2014]. We find that the NMW has a significant impact on the seasonality and on the timing of the wage bargaining process. Inflation, past sectoral wage increases and real NMW increases are the main drivers of wage floor adjustments; elasticities of wage floors with respect to these macro variables are 0.6, 0.3 and 0.25 respectively. Wage floor elasticities to inflation and to the NMW both decrease along the wage floor distribution but are still positive for all levels of wage floors.Keywords: minimum wage, collective bargaining, wages. For that purpose, we collect a large and unique new data set containing all industry-specific scales of wage floors for more than 340 French industries (covering more than 90% of workers of the private sector) over the period 2006-2014. In each industry, wage floors are defined for a specific classification of representative occupations and are used by firms as a reference to set their wages. In our data set, we are able to compute the size of wage floor adjustments between two wage agreements for each occupation. Overall, our data set contains more than 48,000 wage floors for more than 6,000 different occupations defined in industry agreements.Our paper provides new stylized facts on how wage floors are adjusted in France. We first find that the frequency of wage floor adjustments is highly time-and duration-dependent: industrylevel wage agreements are much more frequent during the first quarter of the year, and the usual duration between two wage agreement signing (and so, between two wage floor adjustments) is one year. The frequency of wage floor adjustments is also positively affected by variations of macro variables such as inflation and the growth rate of aggregate wages. Concerning the size of wage floor adjustments, we provide evidence that past inflation plays a key role in 4 explaining the size of wage adjustments. Industry-specific shocks contribute to wage floor increases as long as NMW or inflation increases are not binding.Our second contribution is to investigate the interactions between NMW adjustments and the setting of industry-level wage floors. In France, one important channel of transmission of NMW increases to other wages may come from industry-level wage agreements. To assess the impact of the NMW increases on wage floors, we rely on a Tobit model to disentangle the simultaneous effects of NMW increases on the frequency of wage agreements and on the size of wage floor adjustments. Using changes in the macro variables since the last wage agreement in a given industry, we are able to construct industry-specific variables and to better identify their effects on wage floor...

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Real and nominal wage rigidities in collective bargaining agreements

Cited by 12 publications

References 25 publications

The Incidence of Nominal and Real Wage Rigidity: An Individual-Based Sectoral Approach

The Incidence of Nominal and Real Wage Rigidity: An Individual-Based Sectoral Approach

How Strong is the Case for Downward Real Wage Rigidity?

The Impact of the National Minimum Wage on Industry-Level Wage Bargaining in France

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