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Survey Evidence on Wage Rigidity: Sweden in the 1990s

Author

Listed:
  • Agell, Jonas

    () (Department of Economics, Uppsala University)

  • Lundborg, Per

    (Trade Union Institute for Economic Research)

Abstract

We present the results from a repeat survey on wage rigidity in a sample of 159 Swedish firms, conducted during a prolonged period of very high unemployment and very low inflation. We document the virtual absence of wage cuts, and trace this pervasive nominal rigidity to a set of interacting factors, including the legal status of the wage contract, the structure of bargaining institutions, and the design of social insurance. But employees’ concerns about fairness and relative wages also appear to play an important role. In addition, we report new results on underbidding, efficiency wage mechanisms, and unemployment persistence.

Suggested Citation

  • Agell, Jonas & Lundborg, Per, 1999. "Survey Evidence on Wage Rigidity: Sweden in the 1990s," Working Paper Series 154, Trade Union Institute for Economic Research.
  • Handle: RePEc:hhs:fiefwp:0154
    Note: This paper is a revised version of Working Paper 1999:2 of the Office of Labour Market Policy Evaluation, IFAU, and Working Paper 1999:12 of Department of Economics, Uppsala University.
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    File URL: http://swopec.hhs.se/fiefwp/papers/WP154.pdf
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    References listed on IDEAS

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    Cited by:

    1. Thomas Moutos & William Scarth, 2002. "Technical Change and Unemployment: Policy Responses and Distributional Considerations," CESifo Working Paper Series 710, CESifo.
    2. Arai, Mahmood & Thoursie, Peter Skogman, 2005. "Incentives and selection in cyclical absenteeism," Labour Economics, Elsevier, vol. 12(2), pages 269-280, April.
    3. Thomas Beissinger & Chritoph Knoppik, 2005. "Sind Nominallöhne starr? Neuere Evidenz und wirtschaftspolitische Implikationen," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 6(2), pages 171-188, May.
    4. Smith, Jennifer C., 2002. "Pay cuts and morale: a test of downward nominal rigidity," Economic Research Papers 269462, University of Warwick - Department of Economics.
    5. Delfgaauw, Josse & Dur, Robert, 2007. "Signaling and screening of workers' motivation," Journal of Economic Behavior & Organization, Elsevier, vol. 62(4), pages 605-624, April.
    6. Matthieu Chemin & Joost DeLaat & André Kurmann, 2011. "Reciprocity in Labor Relations: Evidence from a Field Experiment with Long-Term Relationships," Cahiers de recherche 1127, CIRPEE.
    7. Mahmood Arai & Fredrik Heyman, 2009. "Microdata evidence on rent-sharing," Applied Economics, Taylor & Francis Journals, vol. 41(23), pages 2965-2976.
    8. K Clark & M Tomlinson, 2001. "The Determinants of Work Effort: Evidence from the Employment in Britain Survey," The School of Economics Discussion Paper Series 0113, Economics, The University of Manchester.
    9. Nunzia Nappo, 2016. "Interactions on Job and Employee Effort within Italian Social Cooperatives," Forum for Social Economics, Taylor & Francis Journals, vol. 45(4), pages 350-372, October.
    10. Strauss, Tove, 2000. "Economic Reforms and the Poor," Working Paper Series 164, Trade Union Institute for Economic Research.
    11. Strauss, Tove, 2000. "Structural Reforms, Uncertainty, and Private Investment," Working Paper Series 165, Trade Union Institute for Economic Research.

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    More about this item

    Keywords

    Nominal wage rigidity; Panel data; Recession; Effort models; Unemployment persistence;
    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
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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