Employment and Wage Consequences of Flexible Wage Components

Balazs Reizer

Labour Economics, 2022, vol. 78, issue C

Abstract: I document new facts about the relationship between flexible wage components and firm performance using a unique matched employer-employee database from Hungary. Firms providing flexible wage components adjust total wage compensation more to revenue shocks than firms without flexible wages. Nevertheless, employment responses to revenue shocks are the same at firms with and without flexible wage components. These findings also hold in the case of aggregate shocks and during the Great Recession. The results suggest that flexible wage components in their current magnitude do not attenuate employment responses to a negative revenue shock. Finally, I discuss the possible explanations for the empirical findings.

Keywords: Wage structure; Labor demand; Monopsony; Personnel economics (search for similar items in EconPapers)
JEL-codes: J23 J31 J42 M5 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:labeco:v:78:y:2022:i:c:s0927537122001464

DOI: 10.1016/j.labeco.2022.102256

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