Downward Nominal Wage Rigidity in the United States during and after the Great Recession

Bruce Fallick, Daniel Villar Vallenas and William Wascher

No 16-02R, Working Papers from Federal Reserve Bank of Cleveland

Abstract: Rigidity in wages has long been thought to impede the functioning of labor markets. In this paper, we investigate the extent of downward nominal wage rigidity in US labor markets using job-level data from a nationally representative establishment-based compensation survey collected by the Bureau of Labor Statistics. We use several distinct methods to test for downward nominal wage rigidity and to assess whether such rigidity is less or more severe in the presence of negative economic shocks than in more normal economic times. We find a significant amount of downward nominal wage rigidity in the United States and no evidence that the high degree of labor market distress during the Great Recession reduced downward nominal wage rigidity. We further find a lower degree of nominal rigidity at multi-year horizons.

JEL-codes: E24 J3 (search for similar items in EconPapers)
Pages: 48
Date: 2020-03-17
New Economics Papers: this item is included in nep-lma and nep-mac
Note: The first version of this paper was published in January 2016
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Citations: View citations in EconPapers (4)

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https://doi.org/10.26509/frbc-wp-201602r Full Text

Related works:
Working Paper: Downward Nominal Wage Rigidity in the United States During and After the Great Recession (2020)
Working Paper: Downward Nominal Wage Rigidity in the United States during and after the Great Recession (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedcwq:87615

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DOI: 10.26509/frbc-wp-201602r

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