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http://hdl.handle.net/10419/44971
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| Title: | | Does downward nominal wage rigidity dampen wage increases?  |
| Authors: | | Stüber, Heiko Beissinger, Thomas |
| Issue Date: | | 2010 |
| Series/Report no.: | | FZID discussion papers 22-2010 |
| Abstract: | | Focusing on the compression of wage cuts, many empirical studies find a high degree of downward nominal wage rigidity (DNWR). However, the resulting macroeconomic effects seem to be surprisingly weak. This contradiction can be explained within an intertemporal framework in which DNWR not only prevents nominal wage cuts but also induces firms to compress wage increases. We analyze whether a compression of wage increases occurs when DNWR is binding by applying Unconditional Quantile Regression and Seemingly Unrelated Regression to a data set comprising more than 169 million wage changes. We find evidence for a compression of wage increases and only very small effects of DNWR on average real wage growth. The results indicate that DNWR does not provide a strong argument against low inflation targets. |
| Subjects: | | Downward Nominal Wage Rigidity Wage Stickiness Wage Compression Unconditional Quantile Regression |
| JEL: | | E24 E31 J31 |
| Persistent Identifier of the first edition: | | urn:nbn:de:bsz:100-opus-5144 |
| Document Type: | | Working Paper |
| Appears in Collections: | | FZID Discussion Papers, Universität Hohenheim
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