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Employment and Wage Consequences of Flexible Wage Components

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  • Reizer, Balázs

Abstract

I document new facts about the relationship between flexible wage components and firm performance using a unique matched employer-employee database from Hungary. Firms providing flexible wage components adjust total wage compensation more to revenue shocks than firms without flexible wages. Nevertheless, employment responses to revenue shocks are the same at firms with and without flexible wage components. These findings also hold in the case of aggregate shocks and during the Great Recession. The results suggest that flexible wage components in their current magnitude do not attenuate employment responses to a negative revenue shock. Finally, I discuss the possible explanations for the empirical findings.

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  • Reizer, Balázs, 2022. "Employment and Wage Consequences of Flexible Wage Components," Labour Economics, Elsevier, vol. 78(C).
    • Handle: RePEc:eee:labeco:v:78:y:2022:i:c:s0927537122001464
    DOI: 10.1016/j.labeco.2022.102256
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    2. Boza, István & Reizer, Balázs, 2024. "The Role of Flexible Wage Components in Gender Wage Difference," IZA Discussion Papers 17125, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Wage structure; Labor demand; Monopsony; Personnel economics;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics

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