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- Title
How Selective Are Real Wage Cuts? A Micro-analysis Using Linked Employer-Employee Data.
- Authors
Hirsch, Boris; Zwick, Thomas
- Abstract
Using linked employer-employee panel data for Germany, we investigate whether firms implement real wage reductions in a selective manner. In line with insider-outsider and several strands of efficiency wage theory, we find strong evidence for selective wage cuts with high-productivity workers being spared even when controlling for permanent differences in firms' wage policies. In contrast to some recent contributions stressing fairness considerations, we also find that wage cuts increase wage dispersion among peers rather than narrowing it. Notably, the same selectivity pattern shows up when restricting our analysis to firms covered by collective agreements or having a works council.
- Subjects
GERMANY; EMPLOYEES; BUSINESS enterprises; GOVERNMENT policy; WAGES; DATA analysis; GERMAN economic policy; TWENTY-first century
- Publication
LABOUR: Review of Labour Economics & Industrial Relations, 2015, Vol 29, Issue 4, p327
- ISSN
1121-7081
- Publication type
Article
- DOI
10.1111/labr.12063