Nominal Wage Adjustments and the Composition of Pay: New Evidence from Payroll Data

Daniel Schaefer () and Carl Singleton
Additional contact information
Daniel Schaefer: Institut für Volkswirtschaftslehre, Johannes-Kepler-Universität Linz
Authors registered in the RePEc Author Service: Daniel Schäfer

No em-dp2020-01, Economics Discussion Papers from Department of Economics, University of Reading

Abstract: We use representative payroll data from Great Britain to document novel facts about nominal wage adjustments, focusing on workers who stayed in the same firm and job from one year to the next. The richness of these data allows us to analyse basic pay and the other components of earnings, such as overtime and incentive pay, while accounting for hours worked. Weekly and hourly basic pay show signs of downward nominal rigidity, but non-basic pay components adjust more commonly. Unusually, these payroll-based data also report the wage rates of hourly-paid employees. A quarter of these workers typically see no change in their wage rates from one year to the next in the same job, and very few experience wage cuts. We exploit the employer-employee link in the data and find evidence of state-dependent pay setting, depending on the business cycle and whether firms are shrinking or expanding. Finally, we show that the basic and non-basic wages of new hires and existing employees are similarly flexible.

Keywords: downward nominal wage rigidity; components of pay; hourly pay rates; hiring wages; allocative wages (search for similar items in EconPapers)
JEL-codes: E24 E32 J31 J33 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2020-01-28
New Economics Papers: this item is included in nep-eur, nep-hrm, nep-lma and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://www.reading.ac.uk/web/FILES/economics/emdp202001.pdf

Related works:
Working Paper: Nominal Wage Adjustments and the Composition of Pay: New Evidence from Payroll Data (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:rdg:emxxdp:em-dp2020-01

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