Nominal wage rigidity in Europe: estimates and institutional causes
In this paper we construct and compare different measures of nominal wage rigidity for the EU countries using the 1994-2000 waves of the European Community Household Panel. The observed distributions of nominal wage changes show a relevant percentage of nominal wage cuts and freezes across countries. When measurement error is taken into account in an econometric model of wage changes appropriately estimated, it explains almost the totality of wage cuts observed. Therefore the extent of nominal wage rigidity is quite high in Europe. Institutional causes of wage rigidity are investigated, finding an ''hump-shaped'' relationship between nominal wage flexibility and both employment protection legislation and coordination. On the other hand, an ''u-shaped'' impact of union coverage on measures of downward wage rigidity is found
|Date of creation:||01 Jan 2005|
|Contact details of provider:|| Postal: Via Conservatorio 7, I-20122 Milan - Italy|
Phone: +39 02 50321522
Fax: +39 02 50321505
Web page: http://www.demm.unimi.it
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Steinar Holden, 2004.
"Wage formation under low inflation,"
2004/14, Norges Bank.
- McLaughlin, Kenneth J., 1994. "Rigid wages?," Journal of Monetary Economics, Elsevier, vol. 34(3), pages 383-414, December.
- Nickell, S. & Layard, R., 1997.
"Labour Market Institutions and Economic Performance,"
23, Centre for Economic Performance & Institute of Economics.
- Nickell, Stephen & Layard, Richard, 1999. "Labor market institutions and economic performance," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 46, pages 3029-3084 Elsevier.
- Richard Layard & Stephen Nickell, 1998. "Labour Market Institutions and Economic Performance," CEP Discussion Papers dp0407, Centre for Economic Performance, LSE.
- Holden, Steinar & Wulfsberg, Fredrik, 2004.
"Downward Nominal Wage Rigidity in Europe,"
08/2004, Oslo University, Department of Economics.
- Steinar Holden, 2002.
"The Costs of Price Stability - Downward Nominal Wage Rigidity in Europe,"
NBER Working Papers
8865, National Bureau of Economic Research, Inc.
- Steinar Holden, 2004. "The Costs of Price Stability: Downward Nominal Wage Rigidity in Europe," Economica, London School of Economics and Political Science, vol. 71(281), pages 183-208, 05.
- Groth, Charlotta & Johansson, Asa, 2004.
"Bargaining structure and nominal wage flexibility,"
European Economic Review,
Elsevier, vol. 48(6), pages 1349-1365, December.
- Steinar Holden & Fredrik Wulfsberg, 2004. "Downward Nominal Wage Rigidity in Europe (new title: The costs of price stability - downward nominal wage rigidity in Europe)," CESifo Working Paper Series 1177, CESifo Group Munich.
- Stephen Nickell & Glenda Quintini, 2003.
"Nominal wage rigidity and the rate of inflation,"
Royal Economic Society, vol. 113(490), pages 762-781, October.
- Stephen Nickell & Glenda Quintini, 2001. "Nominal Wage Rigidity and the Rate of Inflation," CEP Discussion Papers dp0489, Centre for Economic Performance, LSE.
- Stephen Nickell & Glenda Quintini, 2001. "Nominal wage rigidity and the rate of inflation," LSE Research Online Documents on Economics 20131, London School of Economics and Political Science, LSE Library.
- Kahn, Shulamit, 1997. "Evidence of Nominal Wage Stickiness from Microdata," American Economic Review, American Economic Association, vol. 87(5), pages 993-1008, December.
- Franco Peracchi, 2002. "The European Community Household Panel: A review," Empirical Economics, Springer, vol. 27(1), pages 63-90.
- Smith, Jennifer C, 2000. "Nominal Wage Rigidity in the United Kingdom," Economic Journal, Royal Economic Society, vol. 110(462), pages 176-195, March.
When requesting a correction, please mention this item's handle: RePEc:mil:wpdepa:2005-09. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (DEMM Working Papers)
If references are entirely missing, you can add them using this form.