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Wage Rigidity, Collective Bargaining and the Minimum Wage: Evidence from French Agreement Data

  • Avouyi-Dovi, Sanvi

    ()

    (Bank of France)

  • Fougère, Denis

    ()

    (Sciences Po, Paris)

  • Gautier, Erwan

    ()

    (LEMNA - University of Nantes)

Using several unique data sets on wage agreements at both industry and firm levels in France, we document stylized facts on wage stickiness and the impact of wage-setting institutions on wage rigidity. First, the average duration of wages is a little less than one year and around 10 percent of wages are modified each month by a wage agreement. Data patterns are consistent with predictions of a mixture of Calvo and Taylor models. The frequency of wage change agreements is rather staggered over the year but the frequency of effective wage changes is seasonal. The national minimum wage has a significant impact on the probability of a wage agreement and on the seasonality of wage changes. Negotiated wage increases are correlated with inflation, the national minimum wage increases and the firm profitability.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5835.

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Length: 34 pages
Date of creation: Jul 2011
Date of revision:
Publication status: published in: Review of Economics and Statistics, 2013, 95 (4), 1337-1351
Handle: RePEc:iza:izadps:dp5835
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