Sticky Wages: Evidence from Quarterly Microeconomic Data

Bihan, Hervé Le; Montornès, Jérémi; Heckel, Thomas

doi:10.1257/mac.4.3.1

Cited by 65 publications

(61 citation statements)

References 35 publications

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“…The persistence of wage costs is also highlighted in the literature (see e.g. du Caju et al 2011Caju et al , 2012Le Bihan et al 2012). Wage stickiness is notably the outcome of labour market institutions, adjustment costs and efficiency wages' motives.…”

mentioning

confidence: 85%

Short Notice, Big Difference? The Effect of Temporary Employment on Firm Competitiveness across Sectors

Giuliano¹,

Kampelmann²,

Mahy³

et al. 2017

Brit J Industrial Rel

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This paper is one of the first to examine how the use of fixed-term employment contracts (FTCs) affects firm competitiveness (i.e. productivity, wages and profits) while controlling for key econometric issues such as time-invariant unobserved workplace characteristics, endogeneity and state dependence. We apply dynamic panel data estimation techniques to detailed Belgian linked employer-employee data covering all years from 1999 to 2010. Results show that the effects of FTCs on firm competitiveness vary across sectors: while temporary employment is found to enhance productivity and profits in (labourintensive) services, this is not the case in manufacturing and construction. AbstractThis paper is one of the first to examine how the use of fixed-term employment contracts (FTCs) affects firm competitiveness (i.e. productivity, wages and profits) while controlling for key econometric issues such as time-invariant unobserved workplace characteristics, endogeneity and state dependence. We apply dynamic panel data estimation techniques to detailed Belgian linked employer-employee data covering all years from 1999 to 2010. Results show that the effects of FTCs on firm competitiveness vary across sectors: while temporary employment is found to enhance productivity and profits in (labour-intensive) services, this is not the case in manufacturing and construction.

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mentioning

confidence: 85%

Short Notice, Big Difference? The Effect of Temporary Employment on Firm Competitiveness across Sectors

Giuliano¹,

Kampelmann²,

Mahy³

et al. 2017

Brit J Industrial Rel

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show abstract

“…Most empirical studies of wage setting at the micro level don't mention the word 'tax' (see e.g. Heckel et al 2012). A study providing a tax-based test for nominal rigidities (Poterba et al 1986) simply assumes on grounds of a-priori plausibility that nominal wage rigidity applies to the net-of-tax money wage.…”

Section: Tax-inclusive V Net-of-tax Pricingmentioning

confidence: 99%

Exchange rate implications of Border Tax Adjustment Neutrality

Buiter

2017

Economics

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This paper investigates the implications for the nominal exchange rate of a Border Tax Adjustment (BTA) when there is BTA neutrality. A border tax adjustment is a change from an origin-based system of taxation, that taxes exports but exempts imports to a destination-based system that taxes imports but exempts exports. Both indirect taxes (e.g. a VAT) and direct taxes (e.g. a cash-flow corporate profit tax) can be subject to a BTA. In the US, a BTA for the corporate profit tax is under discussion. There is BTA neutrality when the real equilibrium, including measures of profitability and competitiveness, of an open economy is unchanged when it moves from an origin-based to a destinationbased tax. The conventional wisdom on the exchange rate implications of a neutral BTA is that the currency of the country implementing the BTA will strengthen (appreciate) by a percentage equal to the VAT or CPT tax rate. The main insight of this note is that this 'appreciation presumption' is not robust, even when all conditions for full BTA neutrality are satisfied. Indeed, plausible alternative assumptions about constancy (or stickiness) of nominal prices support a weakening (depreciation) of the currency by the same percentage as the tax rate. On the basis on the very patchy available empirical information, it is not possible to take a view with any degree of confidence on the implications of a BTA for the nominal exchange rate, even if full BTA neutrality prevailed. Whether BTA neutrality itself is a feature of the real world is also a disputed empirical issue. Therefore, buyer (or seller) beware. JEL E31 E62 F11 F13 F41 H25 H87

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“…Using detailed information on labor costs across firms in France, Biscourp et al (2005) show that this is an important margin of adjustment. Using quarterly survey data from France, Le Bihan et al (2014) observe the wage of one to three representative employees within each establishment. Even though it excludes bonuses, they find that the frequency of hourly base wage changes is 38% per quarter and 88% per year.…”

Section: Some Justification Of the Wage Determination Equationmentioning

confidence: 99%

“…Using a back-of-the-envelope calculation, it implies that bonuses respond more than one-tone-one to idiosyncratic shocks. However, Le Bihan et al (2014) data are very likely to miss many new hires or short-term workers, whom I expect to bear most of the adjustment (as discussed in subsection 6.2). A more definitive answer to this question would require detailed micro data that separate bonuses and base wages.…”

Section: Some Justification Of the Wage Determination Equationmentioning

confidence: 99%

Persistence of Shocks and the Reallocation of Labor

Angelidis

Benos

Degiannakis

2016

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This paper proposes a theoretical and quantitative analysis of the reallocation of labor across firms in response to idiosyncratic shocks of different persistence. Creating and destroying jobs is costly and workers are paid a share of the value of the marginal worker. The model predicts that employment and labor costs react differently to transitory shocks and permanent shocks. Quantitative evaluation of the model on a panel of French firms shows the model's performance. Modest adjustment costs are needed to reproduce observed job reallocation and inaction rates. Removing adjustment costs leads to productivity gains of 1% at the steady state. These gains are 50% larger in a economy with only transitory shocks and an order of magnitude lower in an economy with only permanent shocks. Bargaining dampens the reallocation of labor across firms, leading to larger efficiency losses from adjustment costs.JEL Codes: E24, J21, J23

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Sticky Wages: Evidence from Quarterly Microeconomic Data

Cited by 65 publications

References 35 publications

Short Notice, Big Difference? The Effect of Temporary Employment on Firm Competitiveness across Sectors

Short Notice, Big Difference? The Effect of Temporary Employment on Firm Competitiveness across Sectors

Exchange rate implications of Border Tax Adjustment Neutrality

Persistence of Shocks and the Reallocation of Labor

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