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Downward nominal wage rigidity in Poland

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  • Brzoza-Brzezina, Michal
  • Socha, Jacek

Abstract

We use data on enterprise level from a survey of medium sized and big companies to test for downward nominal wage rigidity in Poland. We find relatively weak support for downward nominal wage rigidity when average total compensation in the enterprise is taken into account. However, since this result may be affected by job rotation, we propose a method for eliminating its impact and find that downward wage rigidity becomes higher. Moreover, disaggregating the data reveals strong differences between sectors, with no rigidity in highly competitive branches and significant rigidities in monopolized or state-owned sectors. Still, the amount of downward nominal wage rigidity seems lower than in other countries, although, due to differences in data sets, robust comparisons are not possible.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 843.

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Date of creation: May 2006
Date of revision: Nov 2006
Handle: RePEc:pra:mprapa:843

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Keywords: Downward nominal wage rigidity; Poland; inflation;

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  1. Ricardo J. Caballero & Eduardo Engel & John Haltiwanger, 1996. "Aggregate Employment Dynamics: Building from Microeconomic Evidence," Documentos de Trabajo, Centro de Economía Aplicada, Universidad de Chile 6, Centro de Economía Aplicada, Universidad de Chile.
  2. Adam, Klaus & Billi, Roberto M., 2004. "Optimal monetary policy under discretion with a zero bound on nominal interest rates," Working Paper Series, European Central Bank 0380, European Central Bank.
  3. Dickens, William T. & Götte, Lorenz & Groshen, Erica L. & Holden, Steinar & Messina, Julián & Schweitzer, Mark E. & Turunen, Jarkko & Ward-Warmedinger, Melanie, 2006. "How wages change: micro evidence from the International Wage Flexibility Project," Working Paper Series, European Central Bank 0697, European Central Bank.
  4. International Monetary Fund, 2005. "Wage Flexibility in Turbulent Times," IMF Working Papers 05/134, International Monetary Fund.
  5. Michael W. Elsby, 2006. "Evaluating the Economic Significance of Downward Nominal Wage Rigidity," NBER Working Papers 12611, National Bureau of Economic Research, Inc.
  6. Harris Dellas & George Tavlas, 2004. "Wage Rigidity and Monetary Union," Working Papers, Bank of Greece 12, Bank of Greece.
  7. Ernst Fehr & Lorenz Goette, . "Robustness and Real Consequences of Nominal Wage Rigidity," IEW - Working Papers, Institute for Empirical Research in Economics - University of Zurich 044, Institute for Empirical Research in Economics - University of Zurich.
  8. Ian Babetskii, 2006. "Aggregate Wage Flexibility in Selected New EU Member States," Working Papers, Czech National Bank, Research Department 2006/1, Czech National Bank, Research Department.
  9. Philip Vermeulen, 2006. "Employment stickiness in small manufacturing firms," Computing in Economics and Finance 2006, Society for Computational Economics 144, Society for Computational Economics.
  10. Adam, Klaus & Billi, Roberto M, 2003. "Optimal Monetary Policy Under Commitment with a Zero Bound on Nominal Interest Rates," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4111, C.E.P.R. Discussion Papers.
  11. Christoph Knoppik & Thomas Beissinger, 2009. "Downward nominal wage rigidity in Europe: an analysis of European micro data from the ECHP 1994–2001," Empirical Economics, Springer, Springer, vol. 36(2), pages 321-338, May.
  12. Jakub Borowski & Michal Brzoza-Brzezina, 2004. "Designing Poland's Macroeconomic Strategy on the Way to the Euro Area," EUI-RSCAS Working Papers, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS) 10, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
  13. Fehr, Ernst, 2000. "The Robustness and Real Consequences of Nominal Wage Rigidity," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2516, C.E.P.R. Discussion Papers.
  14. Holden, Steinar & Wulfsberg, Fredrik, 2004. "Downward Nominal Wage Rigidity in Europe," Memorandum, Oslo University, Department of Economics 08/2004, Oslo University, Department of Economics.
  15. Kahn, Shulamit, 1997. "Evidence of Nominal Wage Stickiness from Microdata," American Economic Review, American Economic Association, American Economic Association, vol. 87(5), pages 993-1008, December.
  16. Lebow David E & Saks Raven E & Wilson Beth Anne, 2003. "Downward Nominal Wage Rigidity: Evidence from the Employment Cost Index," The B.E. Journal of Macroeconomics, De Gruyter, De Gruyter, vol. 3(1), pages 1-30, October.
  17. Jacqueline Dwyer, 2003. "Nominal Wage Rigidity in Australia," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 6(1), pages 5-24, March.
  18. Steinar Holden & Fredrik Wulfsberg, 2004. "Downward Nominal Wage Rigidity in Europe (new title: The costs of price stability - downward nominal wage rigidity in Europe)," CESifo Working Paper Series 1177, CESifo Group Munich.
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Citations

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Cited by:
  1. Christoph Knoppik & Thomas Beissinger, 2009. "Downward nominal wage rigidity in Europe: an analysis of European micro data from the ECHP 1994–2001," Empirical Economics, Springer, Springer, vol. 36(2), pages 321-338, May.
  2. Pavel Gertler & Matúš Senaj, 2010. "Downward Wage Rigidities in Slovakia," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 4(1), pages 079-101, March.
  3. Ana María Iregui & Ligia Alba Melo & María Teresa Ramírez, 2009. "Rigideces de los salarios a la baja en Colombia: Evidencia empírica a partir de una muestra de salarios a nivel de firma," BORRADORES DE ECONOMIA 005757, BANCO DE LA REPÚBLICA.
  4. Ana María Iregui & Ligia Alba Melo & María Teresa Ramírez, . "Formación e incrementos de salarios en Colombia: Un estudio microeconómico a partir de una encuesta a nivel de firma," Borradores de Economia 582, Banco de la Republica de Colombia.
  5. Ana María Iregui B. & Ligia Alba Melo B. & María Teresa Ramírez G., . "Are wages rigid in Colombia?: Empirical evidence based on a sample of wages at the firm level," Borradores de Economia 571i, Banco de la Republica de Colombia.
  6. Strawczynski, Michel & Zeira, Joseph, 2009. "Cyclicality of Fiscal Policy: Permanent and Transitory Shocks," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7271, C.E.P.R. Discussion Papers.

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