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Skewness and Location of Distributions of Wage Change Rates in the Presence of Downward Nominal Wage Rigidity

  • Knoppik, Christoph

The skewness-location approach to the analysis of downward nominal wage rigidity in micro data judges the existence of rigidity on the basis of estimated functional relationships between measures of location and of skewness of the distributions of individual rates of wage change in different years. Here it is shown that the properties of theoretical skewness-location relationships can deviate from those asserted by the skewness-location approach thus invalidating its test logic. Consequently, judgment based on the skewness-location approach is biased away from finding evidence for rigidity. Der Skewness-Location Ansatz zur Analyse von Abwärtsnominallohnstarrheit in Mikrodaten beurteilt das Vorliegen von Starrheit anhand geschätzter funktionaler Beziehungen zwischen Lage- und Schiefemaßen der Verteilungen von individuellen Lohnänderungsraten in verschiedenen Jahren. Hier wird gezeigt, dass die Eigenschaften theoretischer Skewness-Location Beziehungen von den im Skewness-Location Ansatz behaupteten abweichen können und so dessen zugrundeliegende Testlogik aushebeln. Die Wahrscheinlichkeit mit dem Skewness-Location Ansatz Abwärtsnominallohnstarrheit zu finden ist daher nach unten verzerrt.

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File URL: http://epub.uni-regensburg.de/4536/1/Kno07skewness.pdf
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Paper provided by University of Regensburg, Department of Economics in its series University of Regensburg Working Papers in Business, Economics and Management Information Systems with number 420.

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Date of creation: 2007
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Handle: RePEc:bay:rdwiwi:763
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  1. Jacqueline Dwyer & Kenneth Leong, 2000. "Nominal Wage Rigidity in Australia," RBA Research Discussion Papers rdp2000-08, Reserve Bank of Australia.
  2. Kuroda, Sachiko & Yamamoto, Isamu, 2003. "Are Japanese Nominal Wages Downwardly Rigid? (Part I): Examinations of Nominal Wage Change Distributions," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 21(2), pages 1-29, August.
  3. David Genesove, 2003. "The Nominal Rigidity of Apartment Rents," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 844-853, November.
  4. Knoppik, Christoph & Beissinger, Thomas, 2005. "Downward Nominal Wage Rigidity in Europe: An Analysis of European Micro Data from the ECHP 1994-2001," IZA Discussion Papers 1492, Institute for the Study of Labor (IZA).
  5. Michael F. Bryan & Stephen G. Cecchetti, 1999. "Inflation And The Distribution Of Price Changes," The Review of Economics and Statistics, MIT Press, vol. 81(2), pages 188-196, May.
  6. Lebow David E & Saks Raven E & Wilson Beth Anne, 2003. "Downward Nominal Wage Rigidity: Evidence from the Employment Cost Index," The B.E. Journal of Macroeconomics, De Gruyter, vol. 3(1), pages 1-30, October.
  7. McLaughlin, Kenneth J., 1994. "Rigid wages?," Journal of Monetary Economics, Elsevier, vol. 34(3), pages 383-414, December.
  8. Thomas Beissinger & Christoph Knoppik, 2001. "Downward Nominal Rigidity in West German Earnings, 1975-95," German Economic Review, Verein für Socialpolitik, vol. 2(4), pages 385-417, November.
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