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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 ()

Working Papers from Czech National Bank, Research Department

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 in order to adjust labour costs when needed. Firms thus use non-base wage components as a buffer to overcome base wage rigidity. We further show that while non-base wage components exhibit some degree of downward rigidity, they do so to a lesser extent than base wages.

Keywords: Bonuses; downward nominal wage rigidity; European Union; firm survey (search for similar items in EconPapers)
JEL-codes: C81 J30 J32 P5 (search for similar items in EconPapers)
Date: 2018-04
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http://www.cnb.cz/miranda2/export/sites/www.cnb.cz ... ad/cnbwp_2018_01.pdf

Related works:
Journal Article: Non-base wage components as a source of wage adaptability to shocks: evidence from European firms, 2010–2013 (2019) 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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