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How Wages Change: Micro Evidence from the International Wage Flexibility Project

Author

Listed:
  • William T. Dickens
  • Lorenz Goette
  • Erica L. Groshen
  • Steinar Holden
  • Julian Messina
  • Mark E. Schweitzer
  • Jarkko Turunen
  • Melanie E. Ward

Abstract

Workers' wages are not set in a spot market. Instead, the wages of most workers -- at least those who do not switch jobs -- typically change only annually and are mediated by a complex set of institutions and factors such as contracts, unions, standards of fairness, minimum wage policy, transfers of risk, and incomplete information. The goal of the International Wage Flexibility Project (IWFP) -- a consortium of over 40 researchers with access to individual workers' earnings data for 16 countries -- is to provide new microeconomic evidence on how wages change for continuing workers. We investigate the extent of wage flexibility, with a particular focus on the extent of downward wage rigidity; and explore how measures of wage flexibility are affected by the wage-setting regimes that typically vary by country.

Suggested Citation

  • William T. Dickens & Lorenz Goette & Erica L. Groshen & Steinar Holden & Julian Messina & Mark E. Schweitzer & Jarkko Turunen & Melanie E. Ward, 2007. "How Wages Change: Micro Evidence from the International Wage Flexibility Project," Journal of Economic Perspectives, American Economic Association, vol. 21(2), pages 195-214, Spring.
  • Handle: RePEc:aea:jecper:v:21:y:2007:i:2:p:195-214
    Note: DOI: 10.1257/jep.21.2.195
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.21.2.195
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    References listed on IDEAS

    as
    1. William T. Dickens & Lorenz Goette & Erica L. Groshen & Steinar Holden & Julian Messina & Mark E. Schweitzer & Jarkko Turunen & Melanie E. Ward, 2007. "How Wages Change: Micro Evidence from the International Wage Flexibility Project," Journal of Economic Perspectives, American Economic Association, vol. 21(2), pages 195-214, Spring.
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    12. William T. Dickens & Lorenz Goette & Erica L. Groshen & Steinar Holden & Julian Messina & Mark E. Schweitzer & Jarkko Turunen & Melanie Ward, 2006. "The interaction of labor markets and inflation: analysis of micro data from the International Wage Flexibility Project," Proceedings, Federal Reserve Bank of San Francisco.
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    More about this item

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining

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