Nominal Wage Flexibility and Institutions: Preliminary Micro-Evidence from the Europanel

Dessy, Orietta

doi:10.2139/ssrn.634102

Cited by 13 publications

(13 citation statements)

References 17 publications

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“…Throughout, the discussion focuses on quantitative econometric rather than purely descriptive or qualitative evidence. 13 13 A count of zero nominal wage changes is used as the indicator of downward nominal wage rigidity in Dessy (2002); no further identification or econometric estimation of the degree of rigidity are used. In the analyses of UK data of Smith (2000) and Nickell and Quintini (2003) evidence on the extent of DNWR is not based on econometric models; both find small amounts of DNWR.…”

Section: Comparison With Results From the Literaturementioning

confidence: 99%

Downward nominal wage rigidity in Europe: an analysis of European micro data from the ECHP 1994–2001

Knoppik

Beißinger

2008

Empir Econ

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This paper substantially extends the limited available evidence on existence and extent of downward nominal wage rigidity in the European Union and the Euro Area. For this purpose we develop an econometric multi-country model based on Kahn's (1997) histogram-location approach and apply it to employee micro data from the European Community Household Panel (ECHP) for twelve of the EU's current member states. Our estimates for the degree of downward nominal wage rigidity on the national as well as the EU-wide level point to marked downward nominal wage rigidity within the European Union.

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Section: Comparison With Results From the Literaturementioning

confidence: 99%

Downward nominal wage rigidity in Europe: an analysis of European micro data from the ECHP 1994–2001

Knoppik

Beißinger

2008

Empir Econ

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“…However, with the exception of the multi country studies of Dessy (2002) and Knoppik and Beissinger (2005), different methods and data in the above-mentioned studies make it in general difficult to compare the degree of downward nominal wage rigidity across countries. 3 As most other studies of DNWR use micro data while we use industry data, it is useful to discuss the difference in the interpretation of DNWR.…”

Section: Theoretical Framework and Related Literaturementioning

confidence: 99%

Downward Nominal Wage Rigidity in the OECD

Holden¹,

Wulfsberg²

2008

The B.E. Journal of Macroeconomics

111

104

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This paper explores the existence of downward nominal wage rigidity (DNWR) in 19 OECD countries, over the period 1973-1999, using data for hourly nominal wages at industry level. Based on a novel nonparametric statistical method, which allows for country and year specific variation in both the median and the dispersion of industry wage changes, we reject the hypothesis of no DNWR. The fraction of wage cuts prevented due to DNWR has fallen over time, from 70 percent in the 1970s to 11 percent in the late 1990s, but the number of industries affected by DNWR has increased. DNWR is more prevalent when unemployment is low, union density is high and employment protection legislation is strict. JEL: J3, J5, C14, C15, E31 Keywords: Downward nominal wage rigidity, OECD, employment protection legislation, wage setting * This is a revised version of 'Downward nominal wage rigidity in Europe'. We wish to thank Lars Holden and Tore Schweder for invaluable help in the formulation of the statistical methods that we use. We are also grateful to Bill Dickens, Mike Elsby, Christoph Knoppik, Alan Manning, Halvor Mehlum and seminar participants at ESEM2003, Norges Bank, IZA Bonn, and at the universities of Oslo, Umeå and Copenhagen for useful comments to earlier drafts. Views and conclusions expressed in this paper are those of the authors alone and cannot be attributed to Norges Bank.

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“…This result partly explains the mixed results in the literature on downward nominal wage rigidity. Dessy (2002) analyses wage dynamics at individual level using the European Community Household Panel data. She compares yearly wage changes of full-time employees staying in the same company for twelve European countries during the 1994-96 period.…”

Section: Rigidities and Adjustment Dynamics: Overheating And Overcoolingmentioning

confidence: 99%

Reviewing Adjustment Dynamics in EMU: From Overheating to Overcooling

2008

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This paper analyses how adjustment dynamics, in an environment with some degree of price and wage rigidity, may create and strengthen asymmetric developments in a monetary union. It presents a simple illustrative model of adjustment dynamics that reproduces quite nicely actual developments in the first years of EMU. The model is used to analyse adjustments to two types of shocks-relative competitiveness shifts and demand disturbances. It is shown that the interaction between real exchange rate adjustment and real interest rate developments may contribute to periods of overheating and overcooling during which output might be for a number of years either above or below potential. Furthermore, the paper looks at the circumstances in which smooth adjustment to shocks can be expected and, on the other hand, when a cycle with greater amplitude is more likely. Finally, the paper examines policy options that could improve the functioning of EMU. The analysis provides another strong argument for pressing ahead with reforms that increase flexibility in labour and product markets and further integrate the economies of the euro area.

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Nominal Wage Flexibility and Institutions: Preliminary Micro-Evidence from the Europanel

Cited by 13 publications

References 17 publications

Downward nominal wage rigidity in Europe: an analysis of European micro data from the ECHP 1994–2001

Downward nominal wage rigidity in Europe: an analysis of European micro data from the ECHP 1994–2001

Downward Nominal Wage Rigidity in the OECD

Reviewing Adjustment Dynamics in EMU: From Overheating to Overcooling

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