How wages change - micro evidence from the International Wage Flexibility Project

William T. Dickens (), Lorenz Götte (), Erica Lynn Groshen (), Steinar Holden (), Julian Messina (), Mark E. Schweitzer (), Jarkko Turunen () and Melanie E. Ward ()
Additional contact information
William T. Dickens: The Brookings Institution, 1775 Massachusetts Avenue, NW Washington, D.C. 20036, USA., http://www.brookings.edu/
Lorenz Götte: Institute for Empirical Research in Economics, University of Zurich, Blümlisalpstrasse 10, CH-8006 Zürich, Switzerland., http://www.iew.uzh.ch/index_en.html
Mark E. Schweitzer: Federal Reserve Bank of Cleveland, P.O. Box 6387 Cleveland, Ohio 44101-1387, USA., http://www.clevelandfed.org/index.cfm
Melanie E. Ward: European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany., http://www.ecb.europa.eu/home/html/index.en.html
Authors registered in the RePEc Author Service: Lorenz Goette ()

No 697, Working Paper Series from European Central Bank

Abstract: How do the complex institutions involved in wage setting affect wage changes? The International Wage Flexibility Project provides new microeconomic evidence on how wages change for continuing workers. We analyze individuals’ earnings in 31 different data sets from sixteen countries, from which we obtain a total of 360 wage change distributions. We find a remarkable amount of variation in wage changes across workers. Wage changes have a notably non-normal distribution; they are tightly clustered around the median and also have many extreme values. Furthermore, nearly all countries show asymmetry in their wage distributions below the median. Indeed, we find evidence of both downward nominal and real wage rigidities. We also find that the extent of both these rigidities varies substantially across countries. Our results suggest that variations in the extent of union presence in wage bargaining play a role in explaining differing degrees of rigidities among countries. JEL Classification: E3, J3, J5.

Keywords: Wage setting; Wage change distributions; Downward nominal wage rigidity; Downward real wage rigidity. (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-eec and nep-lab
Date: 2006-11
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Related works:
Working Paper: How Wages Change: Micro Evidence from the International Wage Flexibility Project (2007)
Working Paper: How wages change: micro evidence from the International Wage Flexibility Project (2006)
Working Paper: How wages change: micro evidence from the international wage flexibility project (2007)
Working Paper: How wages change: micro evidence from the International Wage Flexibility Project (2006)
Working Paper: How Wages Change: Micro Evidence from the International Wage Flexibility Project (2006)
Journal Article: How Wages Change: Micro Evidence from the International Wage Flexibility Project (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:ecb:ecbwps:20060697

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