Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/222160
Authors: 
Babeckij, Jan
Berson, Clémence
Fadejeva, Ludmila
Lamo, Ana
Marotzke, Petra
Martins, Fernando
Strzelecki, Pawe±
Year of Publication: 
2019
Citation: 
[Journal:] IZA Journal of Labor Policy [ISSN:] 2193-9004 [Volume:] 8 [Year:] 2019 [Issue:] 1 [Pages:] 1-18
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 when they are hit by negative shocks. Firms thus use non-base wage components as a strategic margin to overcome base wage rigidity. We also show that while non-base wage components exhibit some degree of downward rigidity this is smaller than that observed for base wages.
Subjects: 
Downward nominal wage rigidity
Bonuses
Firm survey
European Union
JEL: 
J30
J32
C81
P5
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by/4.0/
Document Type: 
Article

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