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
Additional contact information
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: C81 J30 J32 P5 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
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)
Working Paper: Non-base Wage Components as a Source of Wage Adaptability to Shocks: Evidence from European Firms, 2010-2013 (2018)
Working Paper: Non-base wage components as a source of wage adaptability to shocks: evidence from European firms, 2010–2013 (2018)
Working Paper: Non-base wage components as a source of wage adaptability to shocks: Evidence from European firms, 2010-2013 (2018)
Working Paper: Non-base wage components as a source of wage adaptability to shocks. Evidence from European firms, 2010–2013 (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:izalpo:v:8:y:2019:i:1:d:10.1186_s40173-018-0106-8

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/40173

DOI: 10.1186/s40173-018-0106-8

Access Statistics for this article

IZA Journal of Labor Policy is currently edited by Juan F. Jimeno, David Neumark and Núria Rodríguez-Planas

More articles in IZA Journal of Labor Policy from Springer, Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA)
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().