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Labour market adjustment in Europe during the crisis: microeconomic evidence from the Wage Dynamics Network survey

Author

Listed:
  • Izquierdo, Mario

    () (Bank of Spain)

  • Jimeno, Juan

    () (Bank of Spain)

  • Kosma, Theodora

    () (Bank of Greece)

  • Lamo, Ana

    () (European Central Bank)

  • Millard, Stephen

    () (Bank of England)

  • Room, Tairi

    () (Eestipank)

  • Viviano, Eliana

    () (Bank of Italy)

Abstract

Against the backdrop of continuing adjustment in EU labour markets in response to the Great Recession and the sovereign debt crisis, the European System of Central Banks (ESCB)conducted the third wave of the Wage Dynamics Network (WDN)survey in 2014–15 as a follow-up to the two previous WDN waves carried out in 2007 and 2009. The WDN survey collected information on wage-setting practices at the firm level. This third wave sampled about 25,000 firms in 25 European countries with the aim of assessing how firms adjusted wages and employment in response to the various shocks and labour market reforms that took place in the European Union (EU) during the period 2010–13. This paper summarises the main results of WDN3 by identifying some patterns in firms’ adjustments and labour market reforms. It seeks to lay out the main lessons learnt from the survey in terms of both the general response of EU labour markets to the crisis and how these responses varied across the countries that took part in the survey.

Suggested Citation

  • Izquierdo, Mario & Jimeno, Juan & Kosma, Theodora & Lamo, Ana & Millard, Stephen & Room, Tairi & Viviano, Eliana, 2017. "Labour market adjustment in Europe during the crisis: microeconomic evidence from the Wage Dynamics Network survey," Bank of England working papers 661, Bank of England.
    • Handle: RePEc:boe:boeewp:0661
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    Cited by:

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    2. Thomas Y. Mathä & Stephen Millard & Tairi Rõõm & Ladislav Wintr & Robert Wyszynski, 2019. "Shocks and labour cost adjustment: Evidence from a survey of European firms," BCL working papers 128, Central Bank of Luxembourg.
    3. Cornille, David & Rycx, François & Tojerow, Ilan, 2019. "Heterogeneous effects of credit constraints on SMEs’ employment: Evidence from the European sovereign debt crisis," Journal of Financial Stability, Elsevier, vol. 41(C), pages 1-13.
    4. Reamonn Lydon & Thomas Y. Mathä & Stephen Millard, 2019. "Short-time work in the Great Recession: firm-level evidence from 20 EU countries," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 8(1), pages 1-29, December.
    5. Masuch, Klaus & Anderton, Robert & Setzer, Ralph & Benalal, Nicholai, 2018. "Structural policies in the euro area," Occasional Paper Series 210, European Central Bank.
    6. repec:ecb:ecbrbu:2017:0038:1 is not listed on IDEAS
    7. Cornille, David & Rycx, Francois & Tojerow, Ilan, 2018. "Heterogeneous Effects of Credit Constraints on SMEs' Employment: Evidence from the Great Recession," IZA Discussion Papers 11257, Institute of Labor Economics (IZA).
    8. Theodora Kosma & Evangelia Papapetrou & Georgia Pavlou & Christina Tsochatzi & Pinelopi Zioutou, 2017. "Labour market adjustments and reforms in Greece during the crisis: microeconomic evidence from the third wave of the wage dynamics," Working Papers 227, Bank of Greece.
    9. Jimeno, Juan F. & García Pérez, J. Ignacio & Carrasco, Raquel, 2020. "Worker flows and wage dynamics: estimating wage growth without composition effects," UC3M Working papers. Economics 31567, Universidad Carlos III de Madrid. Departamento de Economía.
    10. Jan Babecký & Clémence Berson & Ludmila Fadejeva & Ana Lamo & Petra Marotzke & Fernando Martins & Pawel Strzelecki, 2019. "Non-base wage components as a source of wage adaptability to shocks: evidence from European firms, 2010–2013," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 8(1), pages 1-18, December.
    11. Giulia Bovini & Eliana Viviano, 2018. "The Italian "employment-rich" recovery: a closer look," Questioni di Economia e Finanza (Occasional Papers) 461, Bank of Italy, Economic Research and International Relations Area.
    12. Bodnár, Katalin & Fadejeva, Ludmila & Hoeberichts, Marco & Peinado, Mario Izquierdo & Jadeau, Christophe & Viviano, Eliana, 2011. "Credit shocks and the European labour market," Working Paper Series 2124, European Central Bank.
    13. Berson Clémence, 2020. "Shocks and wage adjustments [Chocs économiques et ajustements salariaux]," Bulletin de la Banque de France, Banque de France, issue 231.
    14. Francesco Palma & Yann Thommen, 2020. "Employment Protection Reform in European Labor Markets: The Collective Bargaining Regime Matters," De Economist, Springer, vol. 168(4), pages 541-575, December.
    15. Juan F. Jimeno, 2017. "Unemployment and the role of supranational policies," IZA World of Labor, Institute of Labor Economics (IZA), pages 390-390, October.
    16. Lamo, Ana, 2017. "Did recent reforms facilitate EU labour market adjustment?," Research Bulletin, European Central Bank, vol. 38.
    17. Guido Bulligan & Eliana Viviano, 2017. "Has the wage Phillips curve changed in the euro area?," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 6(1), pages 1-22, December.
    18. Anderton, Robert & Di Lupidio, Benedetta, 2019. "Effects of labour and product market regulation on worker flows: evidence for the euro area using micro data," Working Paper Series 2312, European Central Bank.
    19. D. Cornille, 2016. "Findings from the European survey on wage-setting," Economic Review, National Bank of Belgium, issue iii, pages 75-86, December.
    20. Fei Peng & Sajid Anwar & Lili Kang, 2020. "Job Movement and Real Wage Flexibility in Eastern and Western Parts of Germany," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 44(4), pages 764-789, October.
    21. Guido Bulligan & Elisa Guglielminetti & Eliana Viviano, 2017. "Wage growth in the euro area: where do we stand?," Questioni di Economia e Finanza (Occasional Papers) 413, Bank of Italy, Economic Research and International Relations Area.
    22. Savšek, Simon, 2018. "What are the main obstacles to hiring after recessions in Europe?," Working Paper Series 2153, European Central Bank.
    23. Chiara Assunta Ricci & Sergio Scicchitano, 2021. "Decomposing changes in income polarization by population group: what happened during the crisis?," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 38(1), pages 235-259, April.
    24. Fei Peng & Sajid Anwar & Lili Kang, 0. "Job Movement and Real Wage Flexibility in Eastern and Western Parts of Germany," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 0, pages 1-26.

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    More about this item

    Keywords

    Wage Dynamics Network; survey data; labour market adjustment; labour market reforms;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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