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Wage rigidity in Canadian collective bargaining agreements

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Author Info
Louis N. Christofides
Thanasis Stengos

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Abstract

The authors search information on the provisions of 10,947 wage contracts signed in the Canadian unionized sector between 1976 and 1999 for evidence of downward nominal wage rigidity (the disinclination of wages to fall, in nominal dollars, below their established level). Over the sample period, real wage reductions were common, but nominal wage reductions were rare. The probability of downward nominal wage rigidity increased substantially during low-inflation periods. During such periods, apparently there was no reduction in the incidence of real wage cuts, but the magnitude of those cuts was modest, suggesting a lesser ability of wages to adjust to labor market conditions than at other times. (Author's abstract.) (Free full-text download available at http://digitalcommons.ilr.cornell.edu/ilrreview/.)

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Publisher Info
Article provided by ILR Review, ILR School, Cornell University in its journal ILR Review.

Volume (Year): 56 (2003)
Issue (Month): 3 (April)
Pages: 429-448
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Handle: RePEc:ilr:articl:v:56:y:2003:i:3:p:429-448

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  2. Ronald G. Ehrenberg & Leif Danziger & Gee San, 1984. "Cost-of-Living Adjustment Clauses in Union Contracts," NBER Working Papers 0998, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Oswald, Andrew J., 1993. "Efficient contracts are on the labour demand curve : Theory and facts," Labour Economics, Elsevier, vol. 1(1), pages 85-113, June. [Downloadable!] (restricted)
    Other versions:
  4. Fehr, Ernst, 2000. "The Robustness and Real Consequences of Nominal Wage Rigidity," CEPR Discussion Papers 2516, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  5. David Card, 1983. "Cost-of-living escalators in major union contracts," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 37(1), pages 34-48, October.
  6. Wayne Simpson & Norman E. Cameron & Derek Hum, 1998. "Is Hypoinflation Good Policy?," Canadian Public Policy, University of Toronto Press, vol. 24(3), pages 291-308, September. [Downloadable!] (restricted)
  7. David Card & Dean Hyslop, 1996. "Does Inflation "Grease the Wheels of the Labor Market"?," NBER Working Papers 5538, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. Agell, Jonas & Lundborg, Per, 1995. " Theories of Pay and Unemployment: Survey Evidence from Swedish Manufacturing Firms," Scandinavian Journal of Economics, Blackwell Publishing, vol. 97(2), pages 295-307, June.
  9. Ernst Fehr & Lorenz Goette, 2000. "Robustness and Real Consequences of Nominal Wage Rigidity," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  10. George A. Akerlof & William R. Dickens & George L. Perry, 1996. "The Macroeconomics of Low Inflation," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 27(1996-1), pages 1-76. [Downloadable!]
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  14. Christofides, Louis N. & Stengos, Thanasis, 2001. "A non-parametric test of the symmetry of PSID wage-change distributions," Economics Letters, Elsevier, vol. 71(3), pages 363-368, June. [Downloadable!] (restricted)
  15. Tobin, James, 1972. "Inflation and Unemployment," American Economic Review, American Economic Association, vol. 62(1), pages 1-18, March.
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  17. Christofides, Louis N, 1990. "The Interaction between Indexation, Contract Duration and Non-contingent Wage Adjustment," Economica, London School of Economics and Political Science, vol. 57(227), pages 395-409, August. [Downloadable!] (restricted)
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  18. Pierre Fortin, 1996. "The Great Canadian Slump," Canadian Journal of Economics, Canadian Economics Association, vol. 29(4), pages 761-87, November. [Downloadable!] (restricted)
  19. Vroman, Wayne, 1984. "Wage Contract Settlements in U.S. Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 66(4), pages 661-65, November. [Downloadable!] (restricted)
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  21. David E. Lebow & David J. Stockton & William L. Wascher, 1995. "Inflation, nominal wage rigidity, and the efficiency of labor markets," Finance and Economics Discussion Series 95-45, Board of Governors of the Federal Reserve System (U.S.).
  22. David Card, 1984. "An Empirical Model of Wage Indexation Provisions in Union Contracts," NBER Working Papers 1388, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  23. Christofides, Louis N, 1987. "Wage Adjustment in Contracts Containing Cost-of-Living Allowance Clauses," The Review of Economics and Statistics, MIT Press, vol. 69(3), pages 531-36, August. [Downloadable!] (restricted)
  24. Campbell, Carl M, III & Kamlani, Kunal S, 1997. "The Reasons for Wage Rigidity: Evidence from a Survey of Firms," The Quarterly Journal of Economics, MIT Press, vol. 112(3), pages 759-89, August.
  25. Katharine G. Abraham & John C. Haltiwanger, 1995. "Real Wages and the Business Cycle," Journal of Economic Literature, American Economic Association, vol. 33(3), pages 1215-1264, September. [Downloadable!] (restricted)
  26. Solon, Gary & Barsky, Robert & Parker, Jonathan A, 1994. "Measuring the Cyclicality of Real Wages: How Important Is Composition Bias?," The Quarterly Journal of Economics, MIT Press, vol. 109(1), pages 1-25, February. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Strawczynski, Michel & Zeira, Joseph, 2009. "Cyclicality of Fiscal Policy: Permanent and Transitory Shocks," CEPR Discussion Papers 7271, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  2. Martins, Pedro S. & Snell, Andy & Thomas, Jonathan P., 2009. "Real and Nominal Wage Rigidity in a Model of Equal-Treatment Contracting," IZA Discussion Papers 4346, Institute for the Study of Labor (IZA). [Downloadable!]
  3. Guangjie Ning, 2008. "Wage forming mechanism in the market transitional process of China (1993–2005): Evidence from the provincial panel data," Psychometrika, Springer, vol. 3(2), pages 312-326, June. [Downloadable!] (restricted)
  4. Petri Böckerman & Seppo Laaksonen & Jari Vainiomäki, 2005. "Who bear the burden of wage cuts? Evidence from Finland during the 1990s," Labor and Demography 0504009, EconWPA. [Downloadable!]
  5. Böckerman, Petri & Laaksonen, Seppo & Vainiomäki, Jari, 2006. "Micro-level evidence on wage rigidities in Finland," MPRA Paper 1811, University Library of Munich, Germany. [Downloadable!]
  6. Jonas Agell & Helge Bennmarker, 2003. "Endogenous Wage Rigidity," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  7. Louis N. Christofides & Amy Peng, 2007. "Real Wage Chronologies," Working Papers 0707, University of Guelph, Department of Economics. [Downloadable!]
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  8. Andy Snell & Jonathan Thomas, 2006. " Labor Contracts, Equal Treatment and Wage-Unemployment Dynamics," CDMA Conference Paper Series 0603, Centre for Dynamic Macroeconomic Analysis. [Downloadable!]
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  9. Agell, Jonas & Bennmarker, Helge, 2003. "Endogenous Wage Rigidity," Research Papers in Economics 2003:10, Stockholm University, Department of Economics. [Downloadable!]
  10. Louis N. Christofides & Paris Nearchou, 2007. "Real and Nominal Wage Rigidities in Collective Bargaining Agreements," IZA Discussion Papers 2799, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
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