How Prevalent Is Downward Rigidity in Nominal Wages? Evidence from Payroll Records in Washington State

Ekaterina S. Jardim, Gary Solon and Jacob Vigdor

No 25470, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: For more than 80 years, many macroeconomic analyses have been premised on the assumption that workers’ nominal wage rates cannot be cut. The U.S. evidence on this assumption has been inconclusive because of distortions from reporting error in household surveys. Following a British literature, we reconsider the issue with more accurate wage data from the payroll records of most employers in the State of Washington over the period 2005-2015. For every one of the 40 four-quarters-apart periods for which we observe year-to-year wage changes, we find that at least 20 percent of job stayers experience nominal wage reductions.

JEL-codes: E24 J3 (search for similar items in EconPapers)
Date: 2019-01
New Economics Papers: this item is included in nep-hme, nep-lma and nep-mac
Note: EFG LS ME
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