Downward Nominal Wage Rigidity in the United States During and After the Great Recession

Bruce Fallick, Daniel Villar Vallenas and William Wascher

No 2016-001r1, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

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.

Keywords: Labor markets; Recessions; Wage rigidity (search for similar items in EconPapers)
JEL-codes: E24 J30 (search for similar items in EconPapers)
Pages: 48
Date: 2016-01-29, Revised 2020-05-15
New Economics Papers: this item is included in nep-lma and nep-mac
Note: Revision
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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https://www.federalreserve.gov/econres/feds/files/2016001r1pap.pdf Full text (application/pdf)
https://doi.org/10.17016/FEDS.2016.001r1 DOI (application/pdf)

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:fedgfe:2016-01

DOI: 10.17016/FEDS.2016.001r1

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