Business cycles and wage rigidity

Cristian Bartolucci

Labour Economics, 2012, vol. 19, issue 4, 568-583

Abstract: In this paper, we analyze the impact of downward wage rigidity on the labor market dynamics. We shows that imposing downward wage rigidity in a matching model with cyclical fluctuations in productivity, endogenous match-destruction, and on-the-job search, quits are procyclical and layoffs countercyclical. Using the European Community Household Panel (ECHP), we provide evidence that downward wage rigidity is empirically relevant in ten European countries. Finally, we show that layoffs are countercyclical and quits are procyclical, as predicted by the model.

Keywords: Downward wage rigidity; Business cycles; Wage renegotiation (search for similar items in EconPapers)
JEL-codes: E3 J41 J63 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Business Cycles and Wage Rigidity (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:labeco:v:19:y:2012:i:4:p:568-583

DOI: 10.1016/j.labeco.2012.05.004

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