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Nominal Wage Rigidity in Contract Data: A Parametric Approach

  • Louis N. Christofides
  • Man Tuen Leung

Using wage agreements reached in the Canadian unionized sector during 1976-99, a period of high as well as exceptionally low inflation, we consider how histograms of wage adjustment change as inflation reaches the low levels of the 1990s. The histograms and parametric tests suggest that wage adjustment is characterized by downward nominal rigidity and significant spikes at zero. There is some evidence of modest menu-cost effects. We examine whether the rigidity features of wage adjustment are sensitive to indexation provisions and investigate whether the distinction between short and long contracts is useful.

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File URL: http://papers.econ.ucy.ac.cy/RePEc/papers/0210.pdf
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Paper provided by University of Cyprus Department of Economics in its series University of Cyprus Working Papers in Economics with number 0210.

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Length: 45 pages
Date of creation: Jul 2002
Date of revision:
Handle: RePEc:ucy:cypeua:0210
Contact details of provider: Web page: http://www.econ.ucy.ac.cy

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