Advanced Search
MyIDEAS: Login to save this article or follow this journal

Testing the Morale Theory of Nominal Wage Rigidity

Contents:

Author Info

  • Daiji Kawaguchi
  • Fumio Ohtake

Abstract

This paper tests the morale theory of nominal wage rigidity, according to which firms resist making nominal cuts to workers’ pay even in adverse economic conditions because such cuts hurt worker morale and productivity. The authors analyze data from an employer-employee survey they conducted in Japan in 2000. That year coincided with a rare spell of deflationary recession, which, the authors argue, is a good setting in which to study how nominal pay cuts affect morale. They find that a nominal annual pay freeze, experienced by 21% of the sampled workers, demoralized workers by reducing their trust in the firm, and that even greater demoralization—not wholly attributable to reduced trust—was associated with a nominal pay cut, which affected 17% of the workers. The observed negative relationship between nominal pay cuts and morale persists even when the estimation includes controls and firm fixed effects.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://digitalcommons.ilr.cornell.edu/ilrreview/vol61/iss1/3
Download Restriction: At http://digitalcommons.ilr.cornell.edu/ilrreview/, all visitors can get free full text downloads of articles published between April 2003 and 18 months prior to today's date. A subscription is required for full-text downloads of more recent articles. Researchers can find older issues of the Review at http://www.jstore.org.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

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

Volume (Year): 61 (2007)
Issue (Month): 1 (October)
Pages: 59-74

as in new window
Handle: RePEc:ilr:articl:v:61:y:2007:i:1:p:59-74

Contact details of provider:
Fax: 607-255-8016
Web page: http://www.ilr.cornell.edu/ilrreview/
More information through EDIRC

Order Information:
Postal: 381 Ives East, Cornell University, Ithaca, NY 14853-3901
Email:
Web: http://digitalcommons.ilr.cornell.edu/ilrreview/

Related research

Keywords:

Other versions of this item:

References

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.:
as in new window
  1. Kanemoto, Yoshitsugu & Bentley MacLeod, W., 1992. "Firm reputation and self-enforcing labor contracts," Journal of the Japanese and International Economies, Elsevier, vol. 6(2), pages 144-162, June.
  2. Alan Ahearne & Joseph Gagnon & Jane Haltmaier & Steve Kamin ... [et al.]., 2002. "Preventing deflation: lessons from Japan's experience in the 1990s," International Finance Discussion Papers, Board of Governors of the Federal Reserve System (U.S.) 729, Board of Governors of the Federal Reserve System (U.S.).
  3. Blinder, Alan S & Choi, Don H, 1990. "A Shred of Evidence on Theories of Wage Stickiness," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 105(4), pages 1003-15, November.
  4. Loewenstein, George F & Sicherman, Nachum, 1991. "Do Workers Prefer Increasing Wage Profiles?," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 9(1), pages 67-84, January.
  5. Joseph G. Altonji & Paul J. Devereux, 1999. "The Extent and Consequences of Downward Nominal Wage Rigidity," NBER Working Papers 7236, National Bureau of Economic Research, Inc.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Hiroshi Fujiki & Howard J. Wall, 2006. "Controlling for geographic dispersion when estimating the Japanese Phillips curve," Working Papers, Federal Reserve Bank of St. Louis 2006-057, Federal Reserve Bank of St. Louis.
  2. Ana María Iregui & Ligia Alba Melo & María Teresa Ramírez, . "Formación e incrementos de salarios en Colombia: Un estudio microeconómico a partir de una encuesta a nivel de firma," Borradores de Economia 582, Banco de la Republica de Colombia.
  3. Ana María Iregui & Ligia Alba Melo & María Teresa Ramírez, 2010. "Incrementos y rigideces de los salarios en Colombia: Un estudio a partir de una encuesta," REVISTA DE ECONOMÍA DEL ROSARIO, UNIVERSIDAD DEL ROSARIO.
  4. Sasaki, Masaru & Ohtake, Fumio, 2013. "Corporate Sports Activity and Work Morale: Evidence from a Japanese Automobile Maker," IZA Discussion Papers 7836, Institute for the Study of Labor (IZA).
  5. Strawczynski, Michel & Zeira, Joseph, 2009. "Cyclicality of Fiscal Policy: Permanent and Transitory Shocks," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7271, C.E.P.R. Discussion Papers.
  6. Smith, Jennifer C, 2013. "Pay Growth, Fairness and Job Satisfaction: Implications for Nominal and Real Wage Rigidity," CAGE Online Working Paper Series, Competitive Advantage in the Global Economy (CAGE) 130, Competitive Advantage in the Global Economy (CAGE).
  7. Abe, Naohito & Yamada, Tomoaki, 2009. "Nonlinear income variance profiles and consumption inequality over the life cycle," Journal of the Japanese and International Economies, Elsevier, vol. 23(3), pages 344-366, September.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ilr:articl:v:61:y:2007:i:1:p:59-74. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ILR Review).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.