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Price, wage and employment response to shocks: evidence from the WDN Survey

Author

Listed:
  • Giuseppe Bertola

    (Università Di Torino)

  • Aurelijus Dabusinskas

    (Eesti Pank)

  • Marco Hoeberichts

    (De Nederlandsche Bank)

  • Mario Izquierdo

    (Banco de España)

  • Claudia Kwapil

    (Oesterreichische Nationalbank)

  • Jeremi Montornès

    (Banque de France)

  • Daniel Radowski

    (Deutsche Bundesbank)

Abstract

This paper analyses information from survey data collected in the framework of the Eurosystem’s Wage Dynamics Network (WDN) on patterns of firm-level adjustment to shocks. We document that the relative intensity and the character of price vs. cost and wage vs. employment adjustments in response to cost-push shocks depend — in theoretically sensible ways — on the intensity of competition in firms’ product markets, on the importance of collective wage bargaining and on other structural and institutional features of firms and of their environment. Focusing on the pass-through of cost shocks to prices, our results suggest that the pass-through is lower in highly competitive firms. Furthermore, a high degree of employment protection and collective wage agreements tend to make this pass through stronger.

Suggested Citation

  • Giuseppe Bertola & Aurelijus Dabusinskas & Marco Hoeberichts & Mario Izquierdo & Claudia Kwapil & Jeremi Montornès & Daniel Radowski, 2010. "Price, wage and employment response to shocks: evidence from the WDN Survey," Working Papers 1006, Banco de España.
    • Handle: RePEc:bde:wpaper:1006
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    Keywords

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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • P50 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - General

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