Downward Wage Rigidity for Different Workers and Firms: An Evaluation for Belgium Using the IWFP Procedure

Abstract

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Nominal and real wage rigidity: Does nationality matter?

“…At odds with these theoretical predictions, the estimated measures of nominal wage rigidity of immigrants from CEEC, Brazil and China are above those of native workers. However, this result is in line with other studies that found that nominal wage rigidity tends to be high at the bottom of the earnings distribution (see (Du Caju et al 2007) for Belgium). The estimated measures of real wage rigidity of the different immigrant groups are above those of native workers, but the difference is very small in the case of PALOP workers.…”

“…In contrast, as discussed in (Du Caju et al 2007), the cost of losing a job is higher for older workers and workers with higher tenure. These workers have, therefore, less incentive to shirk or quit, even in presence of wage cuts, implying a higher likelihood of a wage cut for them and, thus, lower wage rigidity.…”

“…In turn, real rigidity reflects the share of workers whose wage change is bounded by the expected inflation rate, but would be lower in the absence of rigidity. Estimations of downward nominal and real wage rigidity following the IWFP methodology include the works of (Du Caju et al 2007), (Duarte 2008) and (Messina et al 2010).…”

Rigid Labour Compensation and Flexible Employment ? Firm-Level Evidence with Regard to Productivity for Belgium

“…Second, recent evidence on downward wage rigidity in Belgium can be found in Dickens et al (2006Dickens et al ( , 2007, Du Caju et al (2007) and Knoppik and Beissinger (2005). These papers point to high downward real wage rigidity in Belgium.…”

The Long-Run Real Effects of Banking Crises: Firm-Level Investment Dynamics and the Role of Wage Rigidity

“…This analysis, however, is subject to the caveat that wage rigidities at the firm level might be correlated with other firm characteristics, in particular firm size. Du Caju, Fuss, and Wintr (2007) find that wage rigidity is much higher for small firms, as large firms usually have firm-level collective wage agreements which enhances wage flexibility. Similarly, Avouyi-Dovi, Fougére, and Gautier (2013) report that negotiating wages is more costly for small firms, resulting in a lower frequency of wage changes.…”