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dc.contributor.authorHolden, Steinaren_US
dc.date.accessioned2009-01-28T15:53:36Z-
dc.date.available2009-01-28T15:53:36Z-
dc.date.issued2004en_US
dc.identifier.urihttp://hdl.handle.net/10419/18890-
dc.description.abstractThis paper reviews the literature on the effects of low steady-state inflation on wage formation, focusing on four different effects. First, under low inflation, downward nominal wage rigidity (DNWR) may prevent real wage cuts that would have happened had inflation been higher. Second, wages (and prices) are given in nominal contracts, and inflation affects both how often wages are adjusted, and to what extent wages are set in a forward-looking manner. Third, incomplete labour contracts may provide workers with scope for inflicting costs on the firm without violating the contract, thus forcing the firm to accept a rise in nominal wages. Fourth, if effort depends on wages relative to a reference level, and workers and firms underweight inflation when updating the reference level, positive but moderate inflation may reduce wage pressure. The paper ends by a brief survey of empirical evidence, and a discussion of whether labour markets may adapt to a low inflation environment.en_US
dc.language.isoengen_US
dc.relation.ispartofseriesCESifo working papers 1252en_US
dc.subject.jelJ3en_US
dc.subject.jelJ5en_US
dc.subject.jelE31en_US
dc.subject.ddc330en_US
dc.subject.keywordwage formationen_US
dc.subject.keywordnominal contractsen_US
dc.subject.keywordinflationen_US
dc.subject.stwLohntheorieen_US
dc.subject.stwLohnrigiditäten_US
dc.subject.stwInflationen_US
dc.subject.stwTheorieen_US
dc.titleWage formation under low inflationen_US
dc.typeWorking Paperen_US
dc.identifier.ppn39599585Xen_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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