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

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  • Avouyi-Dovi, Sanvi

    ()
    (Bank of France)

  • Fougère, Denis

    ()
    (CREST)

  • Gautier, Erwan

    ()
    (Bank of France)

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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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5835.

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Length: 34 pages
Date of creation: Jul 2011
Date of revision:
Publication status: published in: Review of Economics and Statistics, 2013, 95 (4), 1337-1351
Handle: RePEc:iza:izadps:dp5835

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

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Cited by:
  1. Lehmann, Etienne & Marical, François & Rioux, Laurence, 2013. "Labor income responds differently to income-tax and payroll-tax reforms," Journal of Public Economics, Elsevier, Elsevier, vol. 99(C), pages 66-84.
  2. 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.
  3. Montornès, J. & Sauner-Leroy, J-B., 2010. "Wage-setting Behavior in France: Additional Evidence from an Ad-hoc Survey," Working papers, Banque de France 282, Banque de France.
  4. Huw Dixon & Hervé Le Bihan, 2012. "Generalised Taylor and Generalised Calvo Price and Wage Setting: Micro‐evidence with Macro Implications," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 122(560), pages 532-554, 05.
  5. Heckel, Thomas & Le Bihan, Hervé & Montornès, Jérémi, 2008. "Sticky wages: evidence from quarterly microeconomic data," Working Paper Series, European Central Bank 0893, European Central Bank.
  6. 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.
  7. 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.
  8. Horny, G. & Sevestre, P., 2010. "Wage and price joint dynamics at the firm level: an empirical analysis," Working papers, Banque de France 305, Banque de France.

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