Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/175727
Authors: 
Marotzke, Petra
Anderton, Robert
Bairrao, Ana
Berson, Clémence
Tóth, Peter
Year of Publication: 
2017
Series/Report no.: 
ECB Working Paper 2103
Abstract: 
We explore the impact of wage adjustment on employment with a focus on the role of downward nominal wage rigidities. We use a harmonised survey dataset, which covers 25 European countries in the period 2010-2013. These data are particularly useful for this paper given the firm-level information on the change in economic conditions and collective pay agreements. Our findings confirm the presence of wage rigidities in Europe: first, collective pay agreements reduce the probability of downward wage adjustment; second, the rise in the probability of downward base wage responses following a decrease in demand is significantly smaller than the rise in the probability of an upward wage response associated with an increase in demand. Estimation results point to a negative effect of downward wage rigidities on employment at the firm level.
Subjects: 
Wage rigidity
Employment
Demand shocks
JEL: 
J23
J30
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-2825-0
Document Type: 
Working Paper
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