Nominal wage rigidity and the rate of inflation
Using the accurate and extensive data available in the UK New Earnings Survey, this paper investigates the extent to which nominal wages are downwardly rigid and whether such rigidity interferes with necessary real wage adjustments when inflation is low. Despite the substantial numbers of individuals whose nominal wages fall from one year to the next, we find that if long-run inflation is one percent higher, the number of individuals with negative real pay growth increases by around 1.4 percent. This is controlling for the median and dispersion of the real wage change distribution.
|Date of creation:||Apr 2001|
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- F Green & Steven McIntosh, 2000.
"Working on the Chain Gang? An Examination of Rising Effort Levels in Europe in the 1990s,"
CEP Discussion Papers
dp0465, Centre for Economic Performance, LSE.
- Green, Francis & McIntosh, Steven, 2000. "Working on the chain gang? An examination of rising effort levels in Europe in the 1990s," LSE Research Online Documents on Economics 20172, London School of Economics and Political Science, LSE Library.
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