Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/153540
Authors: 
Babecký, Jan
Du Caju, Philip
Kosma, Theodora
Lawless, Martina
Messina, Julián
Rõõm, Tairi
Year of Publication: 
2009
Series/Report no.: 
ECB Working Paper 1106
Abstract: 
Firms have multiple options at the time of adjusting their wage bills. However, previous literature has mainly focused on base wages. We broaden the analysis beyond downward rigidity in base wages by investigating the use of other margins of labour cost adjustment at the firm level. Using data from a unique survey, we find that firms make frequent use of other, more flexible, components of compensation to adjust the cost of labour. Changes in bonuses and non-pay benefits are some of the potential margins firms use to reduce costs. We also show how the margins of adjustment chosen are affected by firm and worker characteristics.
Subjects: 
European Union
firm survey
labour costs
wage rigidity
JEL: 
J30
C81
P5
Document Type: 
Working Paper

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