The Margins of Labour Cost Adjustment: Survey Evidence from European Firms
Firms have multiple options at the time of adjusting their wage bills. However, previous literature has mainly focused on base wages. We broaden the analysis beyond downward rigidity in base wages by investigating the use of other margins of labour cost adjustment at the firm level. Using data from a unique survey, we find that firms make frequent use of other, more flexible, components of compensation to adjust the cost of labour. Changes in bonuses and non-pay benefits are some of the potential margins firms use to reduce costs. We also show how the margins of adjustment chosen are affected by firm and worker characteristics.
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| Length: | 35 pages |
| Date of creation: | Nov 2009 |
| Handle: | RePEc:cbi:wpaper:12/rt/09 |
| Contact details of provider: | Postal: P.O. Box No. 559, Dame Street, Dublin 2 Phone: (01) 671 6666 Fax: (01) 671 6561 Web page: http://www.centralbank.ie Email: More information through EDIRC
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- Jan Babecký & Philip Du Caju & Theodora Kosma & Martina Lawless & Julián Messina & Tairi Rõõm, 2010.
"Downward Nominal and Real Wage Rigidity: Survey Evidence from European Firms,"
Scandinavian Journal of Economics,
Wiley Blackwell, vol. 112(4), pages 884-910, December.
- Babecky, Jan & Caju, Philip Du & Kosma, Theodora & Lawless, Martina & Messina, Julian & Room, Tairi, 2009. "Downward nominal and real wage rigidity : survey evidence from European firms," Policy Research Working Paper Series 5159, The World Bank.
- Jan Babecky & Philip Du Caju & Theodora Kosma & Martina Lawless & Julian Messina & Tairi Room, 2009. "Downward Nominal and Real Wage Rigidity: Survey Evidence from European Firms," Working Papers 2009/4, Czech National Bank, Research Department.
- Babecký, Jan & Du Caju, Philip & Kosma, Theodora & Lawless, Martina & Messina, Julián & Rõõm, Tairi, 2009. "Downward Nominal and Real Wage Rigidity: Survey Evidence from European Firms," Working Paper Series 1105, European Central Bank.
- Lawless, Martina & Babecký, Jan & Du Caju, Philip & Kosma, Theodora & Messina, Julián & Rõõm, Tairi, 2009. "Downward Nominal and Real Wage Rigidity:Survey Evidence from European Firms," Research Technical Papers 11/RT/09, Central Bank of Ireland.
- Jan Babecký & Philip Du Caju & Theodora Kosma & Martina Lawless & Julián Messina & Tairi Rõõm, 2010. "Downward nominal and real wage rigidity: survey evidence from European firms," Working Papers 110, Bank of Greece.
- Jan Babecky & Philip Du Caju & Theodora Kosma & Martina Lawless & Julian Messina & Tairi Rõõm, 2009. "Downward nominal and real wage rigidity :survey evidence from European firms," Bank of Estonia Working Papers 2009-3, Bank of Estonia, revised 06 Dec 2009.
- Lorenz Goette & Uwe Sunde & Thomas Bauer, 2007. "Wage Rigidity: Measurement, Causes and Consequences," Economic Journal, Royal Economic Society, vol. 117(524), pages 499-507, November.
- Goette, Lorenz & Sunde, Uwe & Bauer, Thomas K., 2007. "Wage rigidity: Measurement, causes and consequences," Munich Reprints in Economics 20448, University of Munich, Department of Economics.
- Philip Du Caju & Erwan Gautier & Daphne Momferatu & Melanie Ward-Warmedinger, 2009. "Institutional Features of Wage Bargaining in 23 European Countries, the US and Japan," Ekonomia, Cyprus Economic Society and University of Cyprus, vol. 12(2), pages 57-108, Winter.
- Du Caju, Ph. & Gautier, E. & Momferatou, D. & Ward-Warmedinger, M., 2008. "Institutional features of wage bargaining in 23 European countries, the US and Japan," Working papers 228, Banque de France.
- Du Caju, Philip & Gautier, Erwan & Momferatou, Daphne & Ward-Warmedinger, Melanie, 2008. "Institutional features of wage bargaining in 23 European countries, the US and Japan," Working Paper Series 0974, European Central Bank.
- Du Caju, Philip & Gautier, Erwan & Momferatou, Daphne & Ward-Warmedinger, Melanie E., 2008. "Institutional Features of Wage Bargaining in 23 European Countries, the US and Japan," IZA Discussion Papers 3867, Institute for the Study of Labor (IZA).
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