Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/33994 
Year of Publication: 
2006
Series/Report no.: 
IZA Discussion Papers No. 2487
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
How do the complex institutions involved in wage setting affect wage changes? The International Wage Flexibility Project provides new microeconomic evidence on how wages change for continuing workers. We analyze individuals' earnings in 31 different data sets from sixteen countries, from which we obtain a total of 360 wage change distributions. We find a remarkable amount of variation in wage changes across workers. Wage changes have a notably non-normal distribution; they are tightly clustered around the median and also have many extreme values. Furthermore, nearly all countries show asymmetry in their wage distributions below the median. Indeed, we find evidence of both downward nominal and real wage rigidities. We also find that the extent of both these rigidities varies substantially across countries. Our results suggest that variations in the extent of union presence in wage bargaining play a role in explaining differing degrees of rigidities among countries.
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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