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Sectoral differences in wage freezes and wage cuts: evidence from a new firm survey

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  • Radowski, Daniel
  • Bonin, Holger

Abstract

The paper provides evidence concerning incidence and sources of nominal wage rigidity in services and manufacturing, using a new and large employer survey on wage and price setting behaviour for Germany. We observe that wage freezes are more frequent in services than in manufacturing, whereas wage cuts are less frequent. The significant sector gaps do not vanish after controlling for relevant firm characteristics influencing the incidence of wage freezes and wage cuts, notably coverage by collective agreements and the degree of price competition on the product market. An analysis of firms' view on the reasons preventing wage cuts suggests that specific fear of excess worker turnover could explain distinct wage setting behaviour in services.

Suggested Citation

  • Radowski, Daniel & Bonin, Holger, 2008. "Sectoral differences in wage freezes and wage cuts: evidence from a new firm survey," Discussion Paper Series 1: Economic Studies 2008,24, Deutsche Bundesbank.
  • Handle: RePEc:zbw:bubdp1:7447
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    Cited by:

    1. Dias, Daniel A. & Marques, Carlos Robalo & Martins, Fernando, 2013. "Wage rigidity and employment adjustment at the firm level: Evidence from survey data," Labour Economics, Elsevier, vol. 23(C), pages 40-49.

    More about this item

    Keywords

    Nominal Wage Rigidity; Efficiency Wages; Manufacturing and Services; Germany;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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