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Downward Nominal Wage Rigidity in Services: Direct Evidence from a Firm Survey

Author

Listed:
  • Radowski, Daniel

    () (Deutsche Bundesbank)

  • Bonin, Holger

    () (IZA)

Abstract

The paper uses a new German employer survey on wage setting practices to analyze incidence and sources of nominal wage rigidity in services vs. manufacturing. We observe that wage freezes are significantly more frequent and wage cuts less frequent in services. Reasons preventing wage cuts reported by employers suggest that fear of excess worker turnover could explain this distinct behavior.

Suggested Citation

  • Radowski, Daniel & Bonin, Holger, 2009. "Downward Nominal Wage Rigidity in Services: Direct Evidence from a Firm Survey," IZA Discussion Papers 3923, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp3923
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    References listed on IDEAS

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    1. Wolfgang Franz & Friedhelm Pfeiffer, 2006. "Reasons for Wage Rigidity in Germany," LABOUR, CEIS, vol. 20(2), pages 255-284, June.
    2. Carl M. Campbell III & Kunal S. Kamlani, 1997. "The Reasons for Wage Rigidity: Evidence from a Survey of Firms," The Quarterly Journal of Economics, Oxford University Press, vol. 112(3), pages 759-789.
    3. Agell, Jonas & Bennmarker, Helge, 2007. "Wage incentives and wage rigidity: A representative view from within," Labour Economics, Elsevier, vol. 14(3), pages 347-369, June.
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    Cited by:

    1. Silvia Fabiani & Ana Lamo & Julián Messina & Tairi Rõõm, 2015. "European firm adjustment during times of economic crisis," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-28, December.
    2. 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.

    More about this item

    Keywords

    manufacturing and services; efficiency wages; nominal wage rigidity; Germany;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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