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Rigid labour compensation and flexible employment ? Firm-level evidence with regard to productivity for Belgium

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  • Catherine Fuss

    ()
    (National Bank of Belgium, Research Department)

  • Ladislav Wintr

    ()
    (Central Bank of Luxembourg, Economics and Research Department)

Abstract

Using firm-level data for Belgium over the period 1997-2005, we evaluate the elasticity of firms' labour and real average labour compensation to microeconomic total factor productivity (TFP). Our results may be summarised as follows. First, we find that the elasticity of average labour compensation to firm-level TFP is very low contrary to that of labour, consistent with real wage rigidity. Second, while the elasticity of average labour compensation to idiosyncratic firm-level TFP is close to zero, the elasticity with respect to aggregate sector-level TFP is high. We argue that average labour compensation adjustment mainly occur at the sector level through sectoral collective bargaining, which leaves little room for firm-level adjustment to firm-specific shocks. Third, we report evidence of a positive relationship between hours and idiosyncratic TFP, as well as aggregate TFP within the year

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Bibliographic Info

Paper provided by National Bank of Belgium in its series Working Paper Research with number 159.

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Length: 45 pages
Date of creation: Mar 2009
Date of revision:
Handle: RePEc:nbb:reswpp:200903-11

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Keywords: labour compensation; employment; hours; Total Factor Productivity;

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Cited by:
  1. Claire Loupias & Patrick Sevestre, 2010. "Cost, Demand and Producer Price Changes," Documents de recherche 10-06, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
  2. Emin Dinlersoz & Henry Hyatt & Sang Nguyen, 2011. "Wage Dynamics along the Life-Cycle of Manufacturing Plants," Working Papers 11-24r, Center for Economic Studies, U.S. Census Bureau, revised Mar 2013.
  3. Maritza López-Novella & Salimata Sissoko, 2009. "Working Paper 12-09 - Salaires et négociation collective en Belgique : une analyse microéconomique en panel," Working Papers 0912, Federal Planning Bureau, Belgium.

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