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

Author

Listed:
  • Giuseppe Bertola
  • Aurelijus Dabušinskas
  • Marco Hoeberichts
  • Mario Izquierdo
  • Claudia Kwapil
  • Jérémi Montornès
  • Daniel Radowski

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 Dabušinskas & Marco Hoeberichts & Mario Izquierdo & Claudia Kwapil & Jérémi Montornès & Daniel Radowski, 2010. "Price, wage and employment response to shocks : evidence from the WDN survey," Bank of Estonia Working Papers wp2010-07, Bank of Estonia, revised 26 May 2010.
  • Handle: RePEc:eea:boewps:wp2010-07
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    More about this item

    Keywords

    wage bargaining; labour-market institutions; survey data; European Union;
    All these keywords.

    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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