Non-base wage components as a source of wage adaptability to shocks: Evidence from European firms, 2010-2013

Jan Babecký, Clémence Berson, Ludmila Fadejeva, Ana Lamo, Petra Marotzke, Fernando Martins and Paweł Strzelecki

No 2018/39, Working Papers REM from ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa

Abstract: This paper provides evidence on the role of non-base wage components as a channel for firms to adjust labour costs in the event of adverse shocks. It uses data from a firm-level survey for 25 European countries that covers the period 2010–2013. We find that firms subject to nominal wage rigidities, which prevent them from adjusting base wages, are more likely to cut non-base wage components in order to adjust labour costs when needed. Firms thus use non-base wage components as a buffer to overcome base wage rigidity. We further show that while non-base wage components exhibit some degree of downward rigidity, they do so to a lesser extent than base wages.

Keywords: downward nominal wage rigidity; bonuses; firm survey; European Union (search for similar items in EconPapers)
JEL-codes: C81 J30 J32 P5 (search for similar items in EconPapers)
Date: 2018-05
New Economics Papers: this item is included in nep-eec and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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https://rem.rc.iseg.ulisboa.pt/wps/pdf/REM_WP_039_2018.pdf (application/pdf)

Related works:
Journal Article: Non-base wage components as a source of wage adaptability to shocks: evidence from European firms, 2010–2013 (2019)
Working Paper: Non-base wage components as a source of wage adaptability to shocks: Evidence from European firms, 2010 2013 (2018)
Working Paper: Non-base Wage Components as a Source of Wage Adaptability to Shocks: Evidence from European Firms, 2010-2013 (2018)
Working Paper: Non-base wage components as a source of wage adaptability to shocks: evidence from European firms, 2010–2013 (2018)
Working Paper: Non-base wage components as a source of wage adaptability to shocks. Evidence from European firms, 2010–2013 (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ise:remwps:wp0392018

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