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How wages change: micro evidence from the International Wage Flexibility Project

William T. Dickens, Lorenz Götte, Erica Groshen (), Steinar Holden (), Julian Messina (), Mark Schweitzer, Jarkko Turunen () and Melanie Ward-Warmedinger

No 697, Working Paper Series from European Central Bank

Abstract: How do the complex institutions involved in wage setting affect wage changes? The International Wage Flexibility Project provides new microeconomic evidence on how wages change for continuing workers. We analyze individuals' earnings in 31 different data sets from sixteen countries, from which we obtain a total of 360 wage change distributions. We find a remarkable amount of variation in wage changes across workers. Wage changes have a notably non-normal distribution; they are tightly clustered around the median and also have many extreme values. Furthermore, nearly all countries show asymmetry in their wage distributions below the median. Indeed, we find evidence of both downward nominal and real wage rigidities. We also find that the extent of both these rigidities varies substantially across countries. Our results suggest that variations in the extent of union presence in wage bargaining play a role in explaining differing degrees of rigidities among countries. JEL Classification: E3, J3, J5

Keywords: downward nominal wage rigidity; downward real wage rigidity; Wage change distributions; wage setting (search for similar items in EconPapers)
Date: 2006-11
Note: 1267758
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Related works:
Journal Article: How Wages Change: Micro Evidence from the International Wage Flexibility Project (2007) Downloads
Working Paper: How wages change: micro evidence from the international wage flexibility project (2007) Downloads
Working Paper: How Wages Change: Micro Evidence from the International Wage Flexibility Project (2007) Downloads
Working Paper: How wages change: micro evidence from the International Wage Flexibility Project (2006) Downloads
Working Paper: How Wages Change: Micro Evidence from the International Wage Flexibility Project (2006) Downloads
Working Paper: How wages change: micro evidence from the International Wage Flexibility Project (2006) Downloads
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