The Margins of Labour Cost Adjustment: Survey Evidence from European Firms

Jan Babecký, Philip Du Caju, Theodora Kosma, Martina Lawless, Julian Messina and Tairi Room

Working Papers from Czech National Bank, Research and Statistics Department

Abstract: Firms have multiple options at the time of adjusting their wage bills. However, previous literature has mainly focused on base wages. We broaden the analysis beyond downward rigidity in base wages by investigating the use of other margins of labour cost adjustment at the firm level. Using data from a unique survey, we find that European firms make frequent use of other, more flexible, components of compensation to adjust the cost of labour. Changes in bonuses and non-pay benefits are some of the potential margins firms use to reduce costs. We also show how the margins of adjustment chosen are affected by firm and worker characteristics.

Keywords: European Union; firm survey; labour costs; wage rigidity. (search for similar items in EconPapers)
JEL-codes: C81 J30 P5 (search for similar items in EconPapers)
Date: 2010-12
New Economics Papers: this item is included in nep-bec, nep-cba, nep-eec, nep-eur and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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https://www.cnb.cz/export/sites/cnb/en/economic-re ... wp/cnbwp_2010_07.pdf

Related works:
Working Paper: The margins of labour cost adjustment: survey evidence from european firms (2009)
Working Paper: The Margins of Labour Cost Adjustment: Survey Evidence from European Firms (2009)
Working Paper: The margins of labour cost adjustment: survey evidence from European firms (2009)
Working Paper: The margins of labour cost adjustment: Survey evidence from European firms (2009)
Working Paper: The margins of labor cost adjustment: survey evidence from European firms (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:cnb:wpaper:2010/07

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