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Base Wage Rigidities: Evidence From a Survey of Slovak Firms

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  • Marianna Cervena

    ()
    (National Bank of Slovakia, Research Department)

Abstract

Building on a unique survey of how Slovak firms adjust wages and prices, this paper studies the extent to which Slovak wages are rigid and the determinants for both nominal and real wage rigidity. Compared to other countries included in the survey, Slovakia has nominal base wage rigidity that is one of the highest and real base wage rigidity that is also relatively high. Apart from looking at the anecdotal evidence, I run multinomial logit regressions to capture the relationship between real wage rigidity, nominal wage rigidity, flexible wages and a number of firm-specific and institutional characteristics. Regression results suggest that the prevalent skill-level of the workforce matters: firms with mainly low-skilled blue-collar workers face lower probabilities of wage rigidities than firms with white-collar workers. Collective bargaining coverage is also a significant determinant. Firms covered by firm-level unions face higher probabilities of both types of wage rigidities compared to firms not covered by any level of collective bargaining. On the other hand, firms facing sectoral level unions have more flexible wages than those without any collective bargaining.

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Bibliographic Info

Paper provided by Research Department, National Bank of Slovakia in its series Working and Discussion Papers with number WP 3/2012.

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Length: 24 pages
Date of creation: Jun 2012
Date of revision:
Handle: RePEc:svk:wpaper:1018

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Keywords: nominal and real wage rigidity; survey evidence;

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  1. Blanchflower, D. & Oswald, A., 1989. "The Wage Curve," Papers 340, London School of Economics - Centre for Labour Economics.
  2. Pavel Gertler, 2010. "The wage curve: A panel data view of labour market segments," Working and Discussion Papers WP 3/2010, Research Department, National Bank of Slovakia.
  3. Du Caju, Philip & Fuss, Catherine & Wintr, Ladislav, 2007. "Downward wage rigidity for different workers and firms: an evaluation for Belgium using the IWFP procedure," Working Paper Series 0840, European Central Bank.
  4. Ian Babetskii, 2007. "Aggregate Wage Flexibility in Selected New EU Member States," CESifo Working Paper Series 1916, CESifo Group Munich.
  5. Franz, Wolfgang & Pfeiffer, Friedhelm, 2006. "Reasons for Wage Rigidity in Germany," IZA Discussion Papers 2017, Institute for the Study of Labor (IZA).
  6. Du Caju, Philip & Fuss, Catherine & Wintr, Ladislav, 2009. "Understanding sectoral differences in downward real wage rigidity: workforce composition, institutions, technology and competition," Working Paper Series 1006, European Central Bank.
  7. Campbell, Carl M, III & Kamlani, Kunal S, 1997. "The Reasons for Wage Rigidity: Evidence from a Survey of Firms," The Quarterly Journal of Economics, MIT Press, vol. 112(3), pages 759-89, August.
  8. Filippo Altissimo & Michael Ehrmann & Frank Smets, 2006. "Inflation persistence and price-setting behaviour in the euro area – a summary of the IPN evidence," Occasional Paper Series 46, European Central Bank.
  9. Pavel Gertler & Matus Senaj, 2008. "Downward Wage Rigidities in Slovakia," Working and Discussion Papers WP 7/2008, Research Department, National Bank of Slovakia.
  10. Alan S. Blinder & Don H. Choi, 1989. "A Shred of Evidence on Theories of Wage Stickiness," NBER Working Papers 3105, National Bureau of Economic Research, Inc.
  11. Robert Mundell, 1963. "Inflation and Real Interest," Journal of Political Economy, University of Chicago Press, vol. 71, pages 280.
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