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Non-base wage components as a source of wage adaptability to shocks: evidence from European firms, 2010–2013

Jan Babecký, Clémence Berson (), Ludmila Fadejeva, Ana Lamo (), Petra Marotzke, Fernando Martins () and Paweł Strzelecki ()
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Ana Lamo: European Central Bank

IZA Journal of Labor Policy, 2019, vol. 8, issue 1, 1-18

Abstract: Abstract This paper provides evidence on the role of non-base wage components as a channel for firms to adjust labour costs in the event of adverse shocks. It uses data from a firm-level survey for 25 European countries that covers the period 2010–2013. We find that firms subject to nominal wage rigidities, which prevent them from adjusting base wages, are more likely to cut non-base wage components when they are hit by negative shocks. Firms thus use non-base wage components as a strategic margin to overcome base wage rigidity. We also show that while non-base wage components exhibit some degree of downward rigidity this is smaller than that observed for base wages.

Keywords: Downward nominal wage rigidity; Bonuses; Firm survey; European Union (search for similar items in EconPapers)
JEL-codes: J30 J32 C81 P5 (search for similar items in EconPapers)
Date: 2019
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http://link.springer.com/10.1186/s40173-018-0106-8 Abstract (text/html)

Related works:
Working Paper: Non-base wage components as a source of wage adaptability to shocks: Evidence from European firms, 2010–2013 (2018) Downloads
Working Paper: Non-base Wage Components as a Source of Wage Adaptability to Shocks: Evidence from European Firms, 2010-2013 (2018) Downloads
Working Paper: Non-base wage components as a source of wage adaptability to shocks: evidence from European firms, 2010–2013 (2018) Downloads
Working Paper: Non-base wage components as a source of wage adaptability to shocks: Evidence from European firms, 2010-2013 (2018) Downloads
Working Paper: Non-base wage components as a source of wage adaptability to shocks. Evidence from European firms, 2010–2013 (2018) Downloads
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DOI: 10.1186/s40173-018-0106-8

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