The margins of labor cost adjustment: survey evidence from European firms

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

No 5160, Policy Research Working Paper Series from The World Bank

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

Keywords: Labor Markets; Labor Policies; Environmental Economics&Policies; Microfinance; Economic Theory&Research (search for similar items in EconPapers)
Date: 2009-12-01
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (13)

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Related works:
Working Paper: The Margins of Labour Cost Adjustment: Survey Evidence from European Firms (2010)
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)
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