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Working Paper Series in Economics
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No. wp2018-03
(Download at EconPapers)
- Eva Branten, Ana Lamo and Tairi Room
- Nominal wage rigidity in the EU countries
before and after the Great Recession:
evidence from the WDN surveys
This paper studies the recent trends in nominal wage rigidity in a large group of
EU countries, using survey data. We analyse two forms of nominal wage rigidity:
downward nominal wage rigidity (DNWR) and the lagged response of wages to
shocks. The frequency of wage changes, which is an indicator of lagged wage
setting, slowed down in the aftermath of the Great Recession. We assess the possible
reasons for this, and show that it was at least partially caused by a combination
of a decline in average wage growth and persistent DNWR. In countries
where wage growth slowed down more after the Great Recession, the frequency
of wage changes declined more steeply as well. Our data allows evaluating the
prevalence of DNWR in diverse economic circumstances. Like earlier research on
this topic, we find that DNWR tends to be strongly prevalent, even in periods of
slow economic growth and low wage inflation. DNWR declines during severe
recessions but even then wage setting does not become completely flexible as the
proportion of observed wage cuts is still below the level that would correspond to
a flexible regime.
- JEL-Codes: B41, D22
- Keywords: downward nominal wage rigidity, wage change frequency, survey
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No. wp2018-02
(Download at EconPapers)
- Wenjuan Chen and Aleksei Netsunajev
- Structural vector autoregression with time varying transition probabilities: identifying uncertainty shocks via changes in volatility
- JEL-Codes: C32, D80, E24
- Keywords: structural vector autoregression; Markov switching; time varying transition probabilities; identification via heteroscedasticity; uncertainty shocks; unemployment dynamics
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No. wp2017-12
(Download at EconPapers)
- Liina Malk, Katalin Bodnar, Ludmila Fadejeva, Stefania Iordache, Desislava Paskaleva , Jurga Pesliakaitė, Nataša Todorović Jemec, Peter Tóth and Robert Wyszyński
- How do firms adjust to rises in the minimum wage? Survey evidence from Central and Eastern Europe
We study the transmission channels for rises in the minimum wage using a
unique firm-level dataset from eight Central and Eastern European countries.
Representative samples of firms in each country were asked to evaluate the
relevance of a wide range of adjustment channels following specific instances of
rises in the minimum wage during the recent post-crisis period. The paper adds to
the rest of literature by presenting the reactions of firms as a combination of
strategies, and evaluates the relative importance of those strategies. Our findings
suggest that the most popular adjustment channels are cuts in non-labour costs,
rises in product prices, and improvements in productivity. Cuts in employment is
less popular and occurs mostly through reduced hiring rather than direct layoffs.
Our study also provides evidence of potential spillover effects that rises in the
minimum wage can have on firms without minimum wage workers.
- JEL-Codes: D22, E23, J31
- Keywords: minimum wage, adjustment channels, firm survey
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