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Wage Rigidity, Collective Bargaining and the Minimum Wage: Evidence from French Agreement Data

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  • Gautier, Erwan
  • Fougère, Denis
  • Avouyi-Dovi, Sanvi

Abstract

Using several unique data sets on wage agreements at both industry and firm levels in France, we document stylized facts on wage stickiness and the impact of wage-setting institutions on wage rigidity. First, the average duration of wages is a little less than one year and around 10 percent of wages are modified each month by a wage agreement. Data patterns are consistent with predictions of a mixture of Calvo and Taylor models. The frequency of wage change agreements is rather staggered over the year but the frequency of effective wage changes is seasonal. The national minimum wage has a significant impact on the probability of a wage agreement and on the seasonality of wage changes. Negotiated wage increases are correlated with inflation, the national minimum wage increases and the firm profitability.

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Paper provided by Paris Dauphine University in its series Economics Papers from University Paris Dauphine with number 123456789/11158.

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Date of creation: Oct 2013
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Publication status: Published in Review of Economics and Statistics, 2013, Vol. 95, no. 4. pp. 1337-1351.Length: 14 pages
Handle: RePEc:dau:papers:123456789/11158

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Keywords: Wage stickiness; wage bargaining; minimum wage; downward nominal wage rigidity;

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Cited by:
  1. Dixon, H. & Le Bihan, H., 2011. "Generalized Taylor and Generalized Calvo price and wage-setting: micro evidence with macro implications," Working papers 324, Banque de France.
  2. Lehmann, Etienne & Marical, François & Rioux, Laurence, 2013. "Labor income responds differently to income-tax and payroll-tax reforms," Journal of Public Economics, Elsevier, vol. 99(C), pages 66-84.
  3. Juillard, Michel & Le Bihan, Herve & Millard, Stephen, 2013. "Non-uniform wage-staggering: European evidence and monetary policy implications," Bank of England working papers 477, Bank of England.
  4. Heckel, Thomas & Le Bihan, Hervé & Montornès, Jérémi, 2008. "Sticky wages: evidence from quarterly microeconomic data," Working Paper Series 0893, European Central Bank.
  5. Alena Bicakova, 2014. "The Trade-off Between Unemployment and Wage Inequality Revisited," CERGE-EI Working Papers wp502, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  6. Montornès, J. & Sauner-Leroy, J-B., 2010. "Wage-setting Behavior in France: Additional Evidence from an Ad-hoc Survey," Working papers 282, Banque de France.
  7. Pedro S. Martins, 2014. "30,000 minimum wages: The economic effects of collective agreement extensions," Working Papers 51, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
  8. Horny, G. & Sevestre, P., 2010. "Wage and price joint dynamics at the firm level: an empirical analysis," Working papers 305, Banque de France.

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