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Sticky Wages: Evidence from Quarterly Microeconomic Data

  • Hervé Le Bihan
  • Jérémi Montornès
  • Thomas Heckel

Using an original micro-dataset from France, we investigate nominal wage stickiness. Nominal wage changes are found to occur at a quarterly frequency of around 38 percent over our sample period, and to be to a large extent staggered across establishments, and very synchronized within establishments. We carry out an econometric analysis of wage changes based on a two-threshold sample selection model. Our results are that the timing of wage adjustments is time-dependent as opposed to state-dependent, there is evidence of predetermination in wage changes, and both backward and forward-looking behavior is relevant in wage setting. (JEL E24, E52, J31)

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Article provided by American Economic Association in its journal American Economic Journal: Macroeconomics.

Volume (Year): 4 (2012)
Issue (Month): 3 (July)
Pages: 1-32

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Handle: RePEc:aea:aejmac:v:4:y:2012:i:3:p:1-32
Note: DOI: 10.1257/mac.4.3.1
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