Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/153131
Authors: 
Dickens, William T.
Götte, Lorenz
Groshen, Erica L.
Holden, Steinar
Messina, Julián
Schweitzer, Mark E.
Turunen, Jarkko
Ward-Warmedinger, Melanie
Year of Publication: 
2006
Series/Report no.: 
ECB Working Paper 697
Abstract: 
How do the complex institutions involved in wage setting affect wage changes? The International Wage Flexibility Project provides new microeconomic evidence on how wages change for continuing workers. We analyze individuals’ earnings in 31 different data sets from sixteen countries, from which we obtain a total of 360 wage change distributions. We find a remarkable amount of variation in wage changes across workers. Wage changes have a notably non-normal distribution; they are tightly clustered around the median and also have many extreme values. Furthermore, nearly all countries show asymmetry in their wage distributions below the median. Indeed, we find evidence of both downward nominal and real wage rigidities. We also find that the extent of both these rigidities varies substantially across countries. Our results suggest that variations in the extent of union presence in wage bargaining play a role in explaining differing degrees of rigidities among countries.
Subjects: 
Downward nominal wage rigidity
Downward real wage rigidity
Wage change distributions
Wage setting
JEL: 
E3
J3
J5
Document Type: 
Working Paper

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