Patterns of nominal and real wage rigidity

Remuneration and reward systems during an economic crisis: case study from Attica region, Greece

“…Concerning wage reduction, the concept of "downward wage rigidity" is at the heart of Keynes' labor market model. In this model, the notion of downward nominal wage rigidity distinctly affects the existence of unemployment and the rationalization to clear the failure of the labor market (Christofides & Nearchou, 2015). Avouyi-Dovi, Fougère, and Gautier (2010) defined downward wage rigidity as "the inability for firms to cut wages in nominal or real terms".…”

Unemployment and Productivity in the Long Run: The Role of Macroeconomic Volatility

“…Several papers employ large panels of advanced economies, including Babecky et al (2010), Dickens et al (2008), Du Caju, Fuss, and Wintr (2009), Fabiani, Kwapil, and Rõõm (2010, Fagan and Messina (2009), Holden and Wulfsberg (2009. Regarding specific advanced economies, Christofides and Nearchou (2010) and Christofides and Li (2005) find strong microevidence of downward real wage rigidities in Canada, arguing (in the second paper) that "90% of expected inflation is built into a contract ex ante and over 62% of unexpected inflation in the previous contract is built into the current notional wage adjustment." Bauer et al (2007) find that in Germany, 30% to 70% of wages settings are subject to downward real wage rigidities; Devicienti, Maida, and Sestito (2007) show that in Italy, that proportion varies between 45% and 65%; Barwell and Schweitzer (2007) suggest that in the United Kindom, downward real wage rigidities affect on average 41% of workers.…”