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Asymmetries and Rigidities in Wage Adjustments by Firms

  • Holzer, Harry J
  • Montgomery, Edward B

The authors use micro data from a survey of firms to test for labor-market rigidities and asymmetries in response to demand shifts. They analyze wage and employment adjustments to positive and negative shifts as measured by real sales growth. The results show that wage adjustments are fairly small compared with employment adjustments. They are also asymmetric, with significant adjustments in response to positive shifts but not negative shifts. These asymmetries are no more pronounced in large firms, manufacturing, heavily-union, or highly-skilled industries than in other firms or industries. In contrast, employment adjustments show no consistent pattern of asymmetry. Copyright 1993 by MIT Press.

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Article provided by MIT Press in its journal Review of Economics & Statistics.

Volume (Year): 75 (1993)
Issue (Month): 3 (August)
Pages: 397-408

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Handle: RePEc:tpr:restat:v:75:y:1993:i:3:p:397-408
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