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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. 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.
  2. Heckel, T. & Le Bihan, H. & Montornès, J., 2008. "Sticky Wages. Evidence from Quarterly Microeconomic Data," Working papers 208, Banque de France.
  3. Horny, G. & Sevestre, P., 2010. "Wage and price joint dynamics at the firm level: an empirical analysis," Working papers 305, 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, vol. 122(560), pages 532-554, 05.
  5. Etienne Lehmann & François Marical & Laurence Rioux, 2012. "Labor Income Responds Differently to Income-Tax and Payroll-Tax Reforms," Working Papers halshs-00856246, HAL.
  6. Juillard, M. & Le Bihan, H. & Millard, S., 2013. "Non-uniform wage-staggering: European evidence and monetary policy implications," Working papers 442, Banque de France.
  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.

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