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Micro-level evidence on wage rigidities in Finland Author info | Abstract | Publisher info | Download info | Related research | Statistics Böckerman, Petri
Laaksonen, Seppo
Vainiomäki, Jari
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This paper analyses the flexibility of the Finnish labour markets from the microeconomic perspective by focusing on individual-level wage changes for job stayers. The study covers the private sector workers by using three separate data sets obtained from payroll records of employers’ associations. Two main conclusions from wage formation emerge. First, there has been macroeconomic flexibility in the labour market. Real wage rigidity declined during the early 1990’s recession and a large proportion of workers experienced real wage cuts. We also find that average wage changes respond negatively to an increase in unemployment. Second, the evidence based on individual-level wage change distributions show that especially real wages are definitely rigid in Finland in international comparison. In addition, the evidence points out that individual-level wage changes have regained the high levels of real rigidity during the late 1990s that prevailed in the 1980s, despite the continued high (but declining) level of unemployment.
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number
1811.
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Date of creation: 15 Dec 2006Date of revision:
Handle: RePEc:pra:mprapa:1811Contact details of provider: Postal: Schackstr. 4, D-80539 Munich, Germany Phone: +49-(0)89-2180-2219 Fax: +49-(0)89-2180-3900 Web page: http://mpra.ub.uni-muenchen.de More information through EDIRC
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Keywords: Wage flexibility ; wage rigidity ; wage formation ; wage cuts ; Other versions of this item:
Find related papers by JEL classification: J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
This paper has been announced in the following NEP Reports :
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Full
references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Böckerman, Petri & Laaksonen, Seppo & Vainiomäki, Jari, 2009.
"Micro-level Rigidity vs. Macro-level Flexibility: Lessons from Finland ,"
MPRA Paper
15061, University Library of Munich, Germany.
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Gorodnichenko, Yuriy & Mendoza, Enrique G. & Tesar, Linda L., 2009.
"The Finnish Great Depression: From Russia with Love ,"
IZA Discussion Papers
4113, Institute for the Study of Labor (IZA).
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