Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/183340
Authors: 
Babecký, Jan
Berson, Clémence
Fadejeva, Ludmila
Lamo, Ana
Marotzke, Petra
Martins, Fernando
Strzelecki, Paweł
Year of Publication: 
2018
Series/Report no.: 
ECB Working Paper 2158
Abstract: 
This paper provides evidence on the role of non-base wage components as a channel for firms to adjust labour costs in the event of adverse shocks. It uses data from a firm-level survey for 25 European countries that covers the period 2010-2013. We find that firms subject to nominal wage rigidities, which prevent them from adjusting base wages, are more likely to cut non-base wage components in order to adjust labour costs when needed. Firms thus use non-base wage components as a buffer to overcome base wage rigidity. We further show that while non-base wage components exhibit some degree of downward rigidity, they do so to a lesser extent than base wages.
Subjects: 
downward nominal wage rigidity
bonuses
firm survey
European Union
JEL: 
J30
J32
C81
P5
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-3263-9
Document Type: 
Working Paper

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