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Who bear the burden of wage cuts? Evidence from Finland during the 1990s

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Author Info

  • Petri Böckerman

    (Labour Institute for Economic Research)

  • Seppo Laaksonen

    (University of Tampere & University of Helsinki)

  • Jari Vainiomäki

    (University of Tampere)

Abstract

This paper explores the incidence of nominal and real wage cuts in the Finnish private sector during the 1990s. Centralized wage freezes together with a positive inflation rate produced real wage cuts for a large proportion of workers during the worst recession years of the early 1990s. In this sense, centralized bargaining shaped the adjustment. The results from micro data reveal that the full-time workers have had a lower likelihood of wage cuts compared with part-time workers. Declines in wages have also been more common in small plants. In addition, there is an important transitory component in wage cuts.

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File URL: http://128.118.178.162/eps/lab/papers/0504/0504009.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Labor and Demography with number 0504009.

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Length: 31 pages
Date of creation: 19 Apr 2005
Date of revision:
Handle: RePEc:wpa:wuwpla:0504009

Note: Type of Document - pdf; pages: 31
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Web page: http://128.118.178.162

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Keywords: micro-level; wages; adjustment;

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  1. Stephen Nickell & Glenda Quintini, 2001. "Nominal Wage Rigidity and the Rate of Inflation," CEP Discussion Papers dp0489, Centre for Economic Performance, LSE.
  2. Malcomson, J., 1998. "Individual employment contracts," Discussion Paper Series In Economics And Econometrics 9804, Economics Division, School of Social Sciences, University of Southampton.
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  7. Yellen, Janet L, 1984. "Efficiency Wage Models of Unemployment," American Economic Review, American Economic Association, vol. 74(2), pages 200-205, May.
  8. Fehr, Ernst & Goette, Lorenz, 2005. "Robustness and real consequences of nominal wage rigidity," Journal of Monetary Economics, Elsevier, vol. 52(4), pages 779-804, May.
  9. Erkki Koskela & Roope Uusitalo, 2003. "The Un-Intended Convergence: How the Finnish Unemployment Reached the European Level," CESifo Working Paper Series 878, CESifo Group Munich.
  10. Ernst Fehr & Lorenz Goette, 2007. "The Robustness and Real Consequences of Nominal Wage Rigidity," Kiel Working Papers 1343, Kiel Institute for the World Economy.
  11. Louis N. Christofides & Thanasis Stengos, 2003. "Wage Rigidity in Canadian Collective Bargaining Agreements ," University of Cyprus Working Papers in Economics 1-2003, University of Cyprus Department of Economics.
  12. Smith, Jennifer C, 2000. "Nominal Wage Rigidity in the United Kingdom," Economic Journal, Royal Economic Society, vol. 110(462), pages C176-95, March.
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Cited by:
  1. Hirsch, Boris & Zwick, Thomas, 2013. "How selective are real wage cuts? A micro-analysis using linked employer-employee data," Discussion Papers 88, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.

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