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Mechanisms of the State Dependence of Wage Setting: Evidence from a Survey of Czech Firms


  • Jan Babecký
  • Kamil Galuščák
  • Diana Žigraiová


Drawing on firms’ reactions to the changing macroeconomic conditions prior to and after the global financial crisis of 2008–09, this article presents evidence for the state dependence of wage setting. Further, the article investigates the underlying mechanisms of state dependence by distinguishing between firms’ general characteristics and financial performance and the environment in which firms operate. The results, based on a survey of Czech firms, show that the frequency of wage adjustment is higher for large firms, foreign-owned firms, firms covered by collective agreements, firms in good financial condition, and firms facing positive shocks, while negative demand shocks and strong competition reduce the frequency of wage adjustment.

Suggested Citation

  • Jan Babecký & Kamil Galuščák & Diana Žigraiová, 2017. "Mechanisms of the State Dependence of Wage Setting: Evidence from a Survey of Czech Firms," Eastern European Economics, Taylor & Francis Journals, vol. 55(4), pages 342-356, July.
  • Handle: RePEc:mes:eaeuec:v:55:y:2017:i:4:p:342-356
    DOI: 10.1080/00128775.2017.1317213

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    Cited by:

    1. Oxana Babecka Kucharcukova & Renata Pasalicova, 2017. "Firm Investment, Financial Constraints and Monetary Transmission: An Investigation with Czech Firm-Level Data," Working Papers 2017/16, Czech National Bank.
    2. Katerina Arnostova & Tomas Adam & Oxana Babecka Kucharcukova & Jan Babecky & Vojtech Belling & Sona Benecka & Jan Bruha & Martin Gurtler & Tibor Hledik & Tomas Holub & Eva Hromadkova & Lubos Komarek &, 2017. "Analyses of the Czech Republic's Current Economic Alignment with the Euro Area 2017," Occasional Publications - Edited Volumes, Czech National Bank, number as17 edited by Katerina Arnostova & Lucie Matejkova, March.
    3. Vaclav Broz & Dominika Kolcunova & Simona Malovana & Lukas Pfeifer, 2018. "Risk-Sensitive Capital Regulation," Occasional Publications - Edited Volumes, Czech National Bank, edition 1, volume 16, number rb16/1 edited by Simona Malovana & Jan Frait, March.
    4. Jan Babecky & Kamil Galuscak & Diana Zigraiova, 2017. "Wage Dynamics and Financial Performance: Evidence from Czech Firms," Working Papers 2017/14, Czech National Bank.
    5. Michal Franta & Tibor Hledik & Jan Vlcek & Michal Dvorak & Zlatuse Komarkova & Adam Kucera & Vaclav Broz & Michal Hlavacek, 2018. "Interest Rates," Occasional Publications - Edited Volumes, Czech National Bank, edition 2, volume 16, number rb16/2 edited by Jan Babecky & Volha Audzei, March.

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