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Wage restraint and volatility in labor markets

Author

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  • Daniel Traca

Abstract

This paper studies the notion that a rise in job insecurity, due to rising labor market uncertainty, leads to wage moderation - the ‘wage restraint hypothesis’. It begins by finding only mixed theoretical support for this hypothesis, as an increase in uncertainty generates an ambiguous effect on wages, although it raises job insecurity. Then, using industry data, it finds evidence of wage restraint, as volatility significantly lowers the share of(production) wages in value added.

Suggested Citation

  • Daniel Traca, 2005. "Wage restraint and volatility in labor markets," Working Papers CEB 05-001.RS, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:sol:wpaper:05-001
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    More about this item

    Keywords

    Job-insecurity; Globalization; Wage Contracts; Volatility.;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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