Endogenous Wage Rigidity
Abstract
We use a random survey of Swedish human resource managers to study the reasons for wage rigidity. Our findings are as follows. First, during the exceptional recession of the 1990s only 1.1 percent of workers received a wage cut. Second, much wage rigidity can be traced to behavioral mechanisms involving negative reciprocity, relative wage comparisons and money illusion. Third, the reasons for wage rigidity differ significantly between large and small establishments, and between the high- and low-end of the labor market. Fourth, there are significant empirical complementarities between efficiency wage mechanisms and worker bargaining strength, and between “exogenous” institutions and endogenous sources of wage rigidity. Fifth, external pay comparisons are a more important source of rigidity in highly unionized establishments. Sixth, there are significant gender differences in pay bargaining and work moral.Download Info
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Paper provided by Stockholm University, Department of Economics in its series Research Papers in Economics with number 2003:10.Length: 40 pages
Date of creation: 21 Aug 2003
Date of revision:
Handle: RePEc:hhs:sunrpe:2003_0010
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Postal: Department of Economics, Stockholm, S-106 91 Stockholm, Sweden
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Keywords: wage rigidity; survey evidence; matched data; reciprocity; behavioral macroeconomics; labor law;Other versions of this item:
- Jonas Agell & Helge Bennmarker, 2003. "Endogenous Wage Rigidity," CESifo Working Paper Series 1081, CESifo Group Munich.
- C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data
- E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
- J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
This paper has been announced in the following NEP Reports:
- NEP-LAB-2003-09-24 (Labour Economics)
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Erkki Koskela & Ronnie Schöb, 2009. "A note on internal and external reference in efficiency wage models," Journal of Economics, Springer, vol. 96(1), pages 79-86, January.
- Jean-Pierre Danthine & André Kurmann, 2008.
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- Jean-Pierre Danthine & André Kurmann, 2005. "The Macroeconomic Consequences of Reciprocity in Labor Relations," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 05.08, Université de Lausanne, Faculté des HEC, DEEP.
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