How Wages Change: Micro Evidence from the International Wage Flexibility Project

William T. Dickens (), Lorenz Goette (), Erica Lynn Groshen (), Steinar Holden (), Julian Messina (), Mark E. Schweitzer (), Jarkko Turunen () and Melanie E. Ward ()
Additional contact information
William T. Dickens: Brookings Institution
Mark E. Schweitzer: Federal Reserve Bank of Cleveland
Melanie E. Ward: European Central Bank and IZA Bonn

No 2487, IZA Discussion Papers from Institute for the Study of Labor (IZA)

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.

Keywords: wage setting; wage change distributions; downward nominal wage rigidity; downward real wage rigidity (search for similar items in EconPapers)
JEL-codes: E3 J3 J5 (search for similar items in EconPapers)
Date: 2006-12
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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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