Price and wage formation in Portugal
AbstractThis paper brings together empirical research on price and wage dynamics for the Portuguese economy based both on micro and macro data. As regards firms' pricing behaviour the most noticeable finding is that prices in Portugal are somewhat less flexible than in the United States but more flexible than in the Euro Area. Regarding firms' wage setting practices, we uncover evidence favouring the hypothesis of aggregate and disaggregate wage flexibility. Despite the existence of mandatory minimum wages, the presence of binding wage floors and the general use of extension mechanisms, the firms still retain some ability to circumvent collective agreements via the mechanism of the wage cushion. The evidence also suggests that Portuguese wages behave in a fashion consistent with the wage curve literature, but the responsiveness of real wages to unemployment changes may have declined over the last decade. JEL Classification: C42, D40, E31, J30
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Bibliographic InfoPaper provided by European Central Bank in its series Working Paper Series with number 1225.
Date of creation: Jul 2010
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Find related papers by JEL classification:
- C42 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Survey Methods
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-07-31 (All new papers)
- NEP-CBA-2010-07-31 (Central Banking)
- NEP-EEC-2010-07-31 (European Economics)
- NEP-EUR-2010-07-31 (Microeconomic European Issues)
- NEP-LAB-2010-07-31 (Labour Economics)
- NEP-LTV-2010-07-31 (Unemployment, Inequality & Poverty)
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.:
- Guimaraes, Paulo & Portugal, Pedro, 2009.
"A Simple Feasible Alternative Procedure to Estimate Models with High-Dimensional Fixed Effects,"
IZA Discussion Papers
3935, Institute for the Study of Labor (IZA).
- Paulo Guimarães & Pedro Portugal, 2009. "A Simple Feasible Alternative Procedure to Estimate Models with High-Dimensional Fixed Effects," Working Papers w200909, Banco de Portugal, Economics and Research Department.
- José Varejão & Pedro Portugal, 2003.
"Employment Dynamics and the Structure of Labor Adjustment Costs,"
w200312, Banco de Portugal, Economics and Research Department.
- José Varejão & Pedro Portugal, 2007. "Employment Dynamics and the Structure of Labor Adjustment Costs," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 137-165.
- Varejão, José & Portugal, Pedro, 2006. "Employment Dynamics and the Structure of Labor Adjustment Costs," IZA Discussion Papers 1922, Institute for the Study of Labor (IZA).
- José Varejão & Pedro Portugal, 2007.
"Spatial and Temporal Aggregation in the Estimation of Labor Demand Functions,"
w200704, Banco de Portugal, Economics and Research Department.
- Varejão, José & Portugal, Pedro, 2007. "Spatial and Temporal Aggregation in the Estimation of Labor Demand Functions," IZA Discussion Papers 2701, Institute for the Study of Labor (IZA).
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