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Asymmetries and Rigidities in Wage Adjustments by Firms

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  • Holzer, Harry J
  • Montgomery, Edward B

Abstract

The authors use micro data from a survey of firms to test for labor-market rigidities and asymmetries in response to demand shifts. They analyze wage and employment adjustments to positive and negative shifts as measured by real sales growth. The results show that wage adjustments are fairly small compared with employment adjustments. They are also asymmetric, with significant adjustments in response to positive shifts but not negative shifts. These asymmetries are no more pronounced in large firms, manufacturing, heavily-union, or highly-skilled industries than in other firms or industries. In contrast, employment adjustments show no consistent pattern of asymmetry. Copyright 1993 by MIT Press.

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Bibliographic Info

Article provided by MIT Press in its journal Review of Economics & Statistics.

Volume (Year): 75 (1993)
Issue (Month): 3 (August)
Pages: 397-408

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Handle: RePEc:tpr:restat:v:75:y:1993:i:3:p:397-408

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Web page: http://mitpress.mit.edu/journals/

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Citations

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Cited by:
  1. Arestis, Philip & Mariscal, Iris Biefang-Frisancho, 1998. "Capital shortages and asymmetries in UK unemployment," Structural Change and Economic Dynamics, Elsevier, vol. 9(2), pages 189-204, June.
  2. Erica L. Groshen & Mark E. Schweitzer, 1996. "The effects of inflation on wage adjustments in firm-level data: grease or sand?," Staff Reports 9, Federal Reserve Bank of New York.
  3. Victoria V. Dobrynskaya, 2008. "The Monetary and Exchange Rate Policy of the Central Bank of Russia under Asymmetrical Price Rigidity," Journal of Innovation Economics, De Boeck Université, vol. 0(1), pages 29-62.
  4. Blanchflower, David G, 1991. "Fear, Unemployment and Pay Flexibility," Economic Journal, Royal Economic Society, vol. 101(406), pages 483-96, May.
  5. Greenwood, Michael J. & Hunt, Gary L. & Kohli, Ulrich, 1997. "The factor-market consequences of unskilled immigration to the United States," Labour Economics, Elsevier, vol. 4(1), pages 1-28, March.
  6. Antonia López-Villavicencio & Valérie Mignon, 2013. "Nonlinearity of the inflation-output trade-off and time-varying price rigidity," Working Papers 2013-02, CEPII research center.
  7. Chung-cheng Lin & C.C. Yang, 2006. "Receiprocity and Downward Wage Rigidity," IEAS Working Paper : academic research 06-A015, Institute of Economics, Academia Sinica, Taipei, Taiwan.
  8. Anabela Carneiro & Pedro Portugal, 2006. "Market Power, Dismissal Threat and Rent Sharing: The Role of Insider and Outsider Forces in Wage Bargaining," Working Papers w200610, Banco de Portugal, Economics and Research Department.
  9. Chung-cheng Lin & C.C. Yang, 2006. "The Firm as a Community Explaining Asymmetric Behavior and Downward Rigidity of Wages," IEAS Working Paper : academic research 06-A014, Institute of Economics, Academia Sinica, Taipei, Taiwan.
  10. Lin, Chung-cheng & Yang, C.C., 2008. "The firm as a community explaining asymmetric behavior and downward rigidity of wages," Journal of Economic Behavior & Organization, Elsevier, vol. 68(2), pages 390-400, November.
  11. Cabrales, Antonio & Hopenhayn, Hugo, 1997. "Nash bargaining with downward rigid wages," Economics Letters, Elsevier, vol. 57(2), pages 213-218, December.
  12. Miguel Portela & Ana Rute Cardoso, 2005. "The provision of wage insurance by the firm: evidence from a longitudinal matched employer-employee dataset," NIPE Working Papers 17/2005, NIPE - Universidade do Minho.
  13. Lucia Foster, 1999. "Employment Adjustment Costs and Establishment Characteristics," Working Papers 99-15, Center for Economic Studies, U.S. Census Bureau.
  14. Lin, Chung-Cheng & Yang, C.C., 2010. "Reciprocity and downward wage rigidity," Journal of Macroeconomics, Elsevier, vol. 32(4), pages 1155-1168, December.
  15. Erica L. Groshen & Mark E. Schweitzer, 1996. "Macro- and microeconomic consequences of wage rigidity," Working Paper 9607, Federal Reserve Bank of Cleveland.

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