How Rigid Are Nominal-Wage Rates?
This study examines the effect of nominal-wage rigidities on wage growth in Canada using a hazard model and micro data for union contracts. The hazard model is specified in a way that allows considerable flexibility in the shape of the estimated notional wage-change distribution. This notional distribution is compared with the observed distribution to estimate the net effect of downward nominal-wage rigidity and menu costs on wage growth. Estimates from alternative versions of the model suggest that the net effect on the average annual growth rate of wages was in the range of 0.10 to 0.18 percentage points in the unionized private sector during the low-inflation period of the 1990s.
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- Farès, J. & Hogan, S., 2000. "The Employment Costs of Downward Nominal-Wage Rigidity," Staff Working Papers 00-1, Bank of Canada.
- Seamus Hogan, 1998.
"What Does Downward Nominal-Wage Rigidity Imply for Monetary Policy?,"
Canadian Public Policy,
University of Toronto Press, vol. 24(4), pages 513-525, December.
- Seamus Hogan, 1997. "What Does Downward Nominal-Wage Rigidity Imply for Monetary Policy?," Staff Working Papers 97-13, Bank of Canada.
- Dupasquier, Chantal & Ricketts, Nicholas, 1998. "Non-Linearities in the Output-Inflation Relationship: Some Empirical Results for Canada," Staff Working Papers 98-14, Bank of Canada.
- Pierre Fortin, 1996. "The Great Canadian Slump," Canadian Journal of Economics, Canadian Economics Association, vol. 29(4), pages 761-787, November. Full references (including those not matched with items on IDEAS)