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Nominal wage flexibility and institutions: preliminary micro-evidence from the Europanel

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  • Orietta DESSY

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Abstract

This paper analyses wage dynamics at individual level using the European Community Household Panel data. We compare yearly wage changes of full-time employees staying in the same firm for twelve European countries during the 1994-96 time-period. For all the European countries we find evidence of nominal wage rigidity. The percentage of employees receiving no wage changes is different across countries, with Germany and Ireland ranking at the top and the bottom respectively. At the same time, nominal wage cuts are not rare. We therefore consider the impact of the bargaining structure and institutions in the European labor markets on the extent of nominal wage fexibility observed.

Suggested Citation

  • Orietta DESSY, 2004. "Nominal wage flexibility and institutions: preliminary micro-evidence from the Europanel," Departmental Working Papers 2004-17, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
  • Handle: RePEc:mil:wpdepa:2004-17
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    File URL: http://wp.demm.unimi.it/files/wp/2004/DEMM-2004_017wp.pdf
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    References listed on IDEAS

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    7. Robert J. Flanagan, 1999. "Macroeconomic Performance and Collective Bargaining: An International Perspective," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1150-1175, September.
    8. Stephen Nickell & Glenda Quintini, 2003. "Nominal wage rigidity and the rate of inflation," Economic Journal, Royal Economic Society, vol. 113(490), pages 762-781, October.
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    Cited by:

    1. Michael D. Bordo & Harold James, 2008. "A Long Term Perspective on the Euro," NBER Working Papers 13815, National Bureau of Economic Research, Inc.
    2. Holden Steinar & Wulfsberg Fredrik, 2008. "Downward Nominal Wage Rigidity in the OECD," The B.E. Journal of Macroeconomics, De Gruyter, vol. 8(1), pages 1-50, April.
    3. Christoffel, Kai & Linzert, Tobias, 2005. "The Role of Real Wage Rigidity and Labor Market Frictions for Unemployment and Inflation Dynamics," IZA Discussion Papers 1896, Institute of Labor Economics (IZA).
    4. Barno Blaes, 2008. "Ausmaß und reale Konsequenzen nach unten starrer Nominallöhne," Working Papers 048, Bavarian Graduate Program in Economics (BGPE).
    5. Steinar Holden & Fredrik Wulfsberg, 2004. "Downward Nominal Wage Rigidity in Europe," Working Paper 2004/5, Norges Bank.

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    More about this item

    Keywords

    nominal wage rigidity; centralisation; coverage; employ-ment; protection legislation;
    All these keywords.

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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