Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/18563 
Year of Publication: 
2004
Series/Report no.: 
RWI Discussion Papers No. 12
Publisher: 
Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI), Essen
Abstract: 
The paper examines real and nominal wage rigidities.We estimate a switching regime model, in which the observed distribution of individual wage changes, computed from West German register data for 1976-1997, is generated by simultaneous processes of real, nominal or no wage rigidity, and measurement error. The fraction of workers facing wage increases that are due to nominal, but mostly real wage rigidity is substantial.The extent of real rigidity rises with inflation, whereas the opposite holds for nominal rigidity. Overall, the incidence of wage rigidity, which accelerates unemployment growth, is most likely minimized in an environment with moderate inflation.
Subjects: 
downward wage rigidity
real effects of inflation
collective bargaining
switching regime model
West Germany
JEL: 
J51
J31
E52
Document Type: 
Working Paper

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