Based on a survey of around 560 Austrian firms conducted within Wage Dynamics Network (WDN) of the ESCB this study investigates how these firms respond to a decline in demand. About 80% of the firms surveyed report that they consider cutting costs a relevant or highly relevant measure in response to a demand shock. The interpretation of the responses suggests that such cost cuts mitigate, at least in part, the drop in output and thus tend to dampen the shock. Furthermore, 55% of firms stated that they would primarily cut nonlabor costs, while 45% would rather cut labor costs; also, firms would rather dismiss employees than cut their base wages. This attitude of Austrian firms can be mainly traced to their fear of declines in labor productivity. JEL classification: C25, E31, J30
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. 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.
Volume (Year): (2009) Issue (Month): 2 (August 2009) Pages: 68-82 Download reference. The following formats are available: HTML
(with abstract),
plain text
(with abstract),
BibTeX,
RIS (EndNote, RefMan, ProCite),
ReDIF
Order Information: Postal: Oesterreichische Nationalbank, Documentation Management and Communications Services, Otto-Wagner Platz 3, A-1090 Vienna, Austria Email:
For technical questions regarding this item, or to correct its listing, contact: (Manfred Fluch).