Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/154211
Authors: 
Fabiani, Silvia
Lamo, Ana
Messina, Julián
Rõõm, Tairi
Year of Publication: 
2015
Series/Report no.: 
ECB Working Paper 1778
Abstract: 
This paper exploits a unique cross-country, firm-level survey to study the responses of European firms to the sharp demand and credit contraction triggered by the global Great Recession of 2009. The analysis reveals that cost reduction—particularly labour cost reduction through the adjustment of quantities rather than prices—was the prevailing strategy that firms had adopted by summer 2009. Remarkably, not even during the worst postwar recession did employers cut base wages to reduce costs. Different combinations of adjustment strategies are apparent, and the particular choices of labour costs adjustments depend substantially on countries’ institutional settings.
Subjects: 
demand and credit shocks
employment
European Union
firm survey
labour costs
margins
wage cuts
JEL: 
J30
J32
J33
J51
ISBN: 
978-92-899-1591-5
Document Type: 
Working Paper

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