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European firm adjustment during times of economic crisis

Listed author(s):
  • Silvia Fabiani

    ()

  • Ana Lamo

    ()

  • Julián Messina

    ()

  • Tairi Rõõm

    ()

This paper exploits a unique cross-country, firm-level survey to study the responses of European firms to the sharp demand and credit contraction triggered by the global Great Recession of 2009. The analysis reveals that cost reduction—particularly labour cost reduction through the adjustment of quantities rather than prices—was the prevailing strategy that firms had adopted by summer 2009. Remarkably, not even during the worst postwar recession did employers cut base wages to reduce costs. Different combinations of adjustment strategies are apparent, and the particular choices of labour costs adjustments depend substantially on countries’ institutional settings. JEL codes: J30, J32, J33, J51 Copyright Fabiani et al. 2015

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File URL: http://hdl.handle.net/10.1186/s40173-015-0048-3
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Article provided by Springer & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA) in its journal IZA Journal of Labor Policy.

Volume (Year): 4 (2015)
Issue (Month): 1 (December)
Pages: 1-28

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Handle: RePEc:spr:izalpo:v:4:y:2015:i:1:p:1-28:10.1186/s40173-015-0048-3
DOI: 10.1186/s40173-015-0048-3
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  1. Bertola, Giuseppe, 1999. "Microeconomic perspectives on aggregate labor markets," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 45, pages 2985-3028 Elsevier.
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