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- Title
Asymmetric wage adjustment and employment in European firms.
- Authors
Marotzke, Petra; Anderton, Robert; Bairrao, Ana; Berson, Clémence; Tóth, Peter
- Abstract
We explore the impact of wage adjustment on employment with a focus on the role of downward nominal wage rigidities. We use a harmonised survey dataset, which covers 25 European countries in the period 2010–2013. These data are particularly useful for this paper given the firm-level information on the change in economic conditions and collective pay agreements. Our findings confirm the presence of wage rigidities in Europe: first, collective pay agreements reduce the probability of downward wage adjustment; second, wage responses to demand developments are asymmetric with a weaker downward response. Estimation results show that a wage reduction significantly lowers the probability of a decrease in employment at the firm level when demand falls and thereby point to a negative effect of downward wage rigidities on employment at the firm level.
- Subjects
EUROPE; WAGES; ECONOMIC change; EMPLOYMENT; COLLECTIVE labor agreements; BUSINESS enterprises
- Publication
B.E. Journal of Macroeconomics, 2020, Vol 20, Issue 2, p1
- ISSN
2194-6116
- Publication type
Article
- DOI
10.1515/bejm-2018-0254