Wage restraint and volatility in labor markets
This paper studies the notion that a rise in job insecurity, due to rising labor market uncertainty, leads to wage moderation - the ‘wage restraint hypothesis’. It begins by finding only mixed theoretical support for this hypothesis, as an increase in uncertainty generates an ambiguous effect on wages, although it raises job insecurity. Then, using industry data, it finds evidence of wage restraint, as volatility significantly lowers the share of(production) wages in value added.
|Date of creation:||Mar 2005|
|Publication status:||Published by: Centre Emile Bernheim|
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