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Base Wage Rigidities: Evidence From a Survey of Slovak Firms

  • Marianna Cervena

    ()

    (National Bank of Slovakia, Research Department)

Building on a unique survey of how Slovak firms adjust wages and prices, this paper studies the extent to which Slovak wages are rigid and the determinants for both nominal and real wage rigidity. Compared to other countries included in the survey, Slovakia has nominal base wage rigidity that is one of the highest and real base wage rigidity that is also relatively high. Apart from looking at the anecdotal evidence, I run multinomial logit regressions to capture the relationship between real wage rigidity, nominal wage rigidity, flexible wages and a number of firm-specific and institutional characteristics. Regression results suggest that the prevalent skill-level of the workforce matters: firms with mainly low-skilled blue-collar workers face lower probabilities of wage rigidities than firms with white-collar workers. Collective bargaining coverage is also a significant determinant. Firms covered by firm-level unions face higher probabilities of both types of wage rigidities compared to firms not covered by any level of collective bargaining. On the other hand, firms facing sectoral level unions have more flexible wages than those without any collective bargaining.

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Paper provided by Research Department, National Bank of Slovakia in its series Working and Discussion Papers with number WP 3/2012.

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Length: 24 pages
Date of creation: Jun 2012
Date of revision:
Handle: RePEc:svk:wpaper:1018
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  1. Jonas Agell & Per Lundborg, 2003. "Survey Evidence on Wage Rigidity and Unemployment: Sweden in the 1990s," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(1), pages 15-30, 03.
  2. Pavel Gertler & Matus Senaj, 2008. "Downward Wage Rigidities in Slovakia," Working and Discussion Papers WP 7/2008, Research Department, National Bank of Slovakia.
  3. Robert Mundell, 1963. "Inflation and Real Interest," Journal of Political Economy, University of Chicago Press, vol. 71, pages 280.
  4. Patrick Lünnemann & Ladislav Wintr, 2009. "Wages are flexible, aren?t they? evidence from monthly micro wage data," BCL working papers 39, Central Bank of Luxembourg.
  5. Wolfgang Franz & Friedhelm Pfeiffer, 2006. "Reasons for Wage Rigidity in Germany," LABOUR, CEIS, vol. 20(2), pages 255-284, 06.
  6. David G. Blanchflower & Andrew J. Oswald, 1995. "The Wage Curve," MIT Press Books, The MIT Press, edition 1, volume 1, number 026202375x, June.
  7. Du Caju, Philip & Fuss, Catherine & Wintr, Ladislav, 2009. "Understanding sectoral differences in downward real wage rigidity: workforce composition, institutions, technology and competition," Working Paper Series 1006, European Central Bank.
  8. Du Caju, Philip & Fuss, Catherine & Wintr, Ladislav, 2007. "Downward wage rigidity for different workers and firms: an evaluation for Belgium using the IWFP procedure," Working Paper Series 0840, European Central Bank.
  9. Filippo Altissimo & Michael Ehrmann & Frank Smets, 2006. "Inflation persistence and price-setting behaviour in the euro area – a summary of the IPN evidence," Occasional Paper Series 46, European Central Bank.
  10. Ian Babetskii, 2006. "Aggregate Wage Flexibility in Selected New EU Member States," Working Papers 2006/1, Czech National Bank, Research Department.
  11. Agell, J. & Lundborg, P., 1992. "Theories of Pay and Unemployment: Survey Evidence from Swedish Manufacturing Firms," Papers 1993-8, Uppsala - Working Paper Series.
  12. Blinder, Alan S & Choi, Don H, 1990. "A Shred of Evidence on Theories of Wage Stickiness," The Quarterly Journal of Economics, MIT Press, vol. 105(4), pages 1003-15, November.
  13. Pavel Gertler, 2010. "The wage curve: A panel data view of labour market segments," Working and Discussion Papers WP 3/2010, Research Department, National Bank of Slovakia.
  14. Campbell, Carl M, III & Kamlani, Kunal S, 1997. "The Reasons for Wage Rigidity: Evidence from a Survey of Firms," The Quarterly Journal of Economics, MIT Press, vol. 112(3), pages 759-89, August.
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