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Are real wages rigid downwards?

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Author Info

  • Holden, Steinar

    ()
    (Dept. of Economics, University of Oslo)

  • Wulfsberg, Fredrik

    ()
    (Norges Bank)

Abstract

This paper explores the existence of downward real wage rigidity (drwr) in 19 oecd countries, over the period 1973–1999, using data for hourly nominal earnings at industry level. Based on a nonparametric statistical method, which allows for country and year specific variation in both the median and the dispersion of industry wage changes, we find evidence of some downward rigidity of real wages in OECD countries overall, as well as for regions and time periods. There is some evidence that real wage cuts are less prevalent under strict employment protection legislation and high union density. Generally, we find stronger evidence for downward nominal than for downward real wage rigidity.

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File URL: http://www.sv.uio.no/econ/english/research/memorandum/pdf-files/2007/Memo-07-2007.pdf
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Bibliographic Info

Paper provided by Oslo University, Department of Economics in its series Memorandum with number 07/2007.

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Length: 42 pages
Date of creation: 28 Mar 2007
Date of revision:
Handle: RePEc:hhs:osloec:2007_007

Contact details of provider:
Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
Email:
Web page: http://www.oekonomi.uio.no/indexe.html
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Related research

Keywords: Downward real wage rigidity; OECD; employment protection legislation; wage setting;

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References

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  2. Agell, Jonas & Lundborg, Per, 1999. "Survey Evidence on Wage Rigidity and Unemployment: Sweden in the 1990s," Working Paper Series 1999:12, Uppsala University, Department of Economics.
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  6. Holden, Steinar & Wulfsberg, Fredrik, 2007. "Downward nominal wage rigidity in the OECD," Working Paper Series 0777, European Central Bank.
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Citations

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Cited by:
  1. J. Atsu Amegashie & Bazoumana Ouattara & Eric Strobl, 2007. "Moral Hazard and the Composition of Transfers: Theory with an Application to Foreign Aid," CESifo Working Paper Series 1996, CESifo Group Munich.
  2. Knell, Markus & Stiglbauer, Alfred, 2009. "The impact of reference norms on inflation persistence when wages are staggered," Working Paper Series 1047, European Central Bank.
  3. Herings P. Jean-Jacques & Peeters Ronald & Yang Michael S., 2009. "Piracy on the internet: Accommodate it or fight it? A dynamic approach," Research Memorandum 034, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  4. Harilaos Mertzanis, 2009. "Efficiency Wages, Inflation And Growth," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 34(2), pages 131-151, December.
  5. Spruk, Rok, 2010. "Iceland's Economic and Financial Crisis: Causes, Consequences and Implications," MPRA Paper 29972, University Library of Munich, Germany.

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