EconPapers    
Economics at your fingertips  
 

Wages and the Risk of Displacement

Anabela Carneiro () and Pedro Portugal

A chapter in Work, Earnings and Other Aspects of the Employment Relation, 2008, vol. 28, pp 251-276 from Emerald Publishing Ltd

Abstract: In this paper a simultaneous-equations model of firm closing and wage determination is specified in order to analyse how wages adjust to unfavorable product demand shocks that raise the risk of displacement through firm closing, and to what extent an exogenous wage change affects the exit likelihood. Using a longitudinal matched worker-firm data set from Portugal, the estimation results suggest that, under the existence of noncompetitive rents, the fear of job loss leads workers to accept wage concessions, even though a compensating differential for the ex ante risk of displacement might exist. A novel result that emerges from this study is that firms with a higher incidence of minimum wage earners are more vulnerable to adverse shocks due to their inability to adjust wages downward. Indeed, minimum wage restrictions were seen to increase the failure rates.

Date: 2008
References: Add references at CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.emeraldinsight.com/10.1016/S0147-9121(0 ... RePEc&WT.mc_id=RePEc (text/html)
Access to full text is restricted to subscribers

Related works:
Working Paper: Wages and the risk of displacement (2010) Downloads
Working Paper: Wages and the Risk of Displacement (2006) Downloads
Working Paper: Wages and the Risk of Displacement (2003) Downloads
Working Paper: Wages and the Risk of Displacement (2003) Downloads
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:eme:rleczz:s0147-9121(08)28008-8

Ordering information: This item can be ordered from
Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
http://www.emeraldgr ... ies.htm?id=0147-9121

Access Statistics for this chapter

More chapters in Research in Labor Economics from Emerald Publishing Ltd
Bibliographic data for series maintained by Charlotte Maiorana ().

 
Page updated 2020-01-27
Handle: RePEc:eme:rleczz:s0147-9121(08)28008-8