Downward Wage Rigidity and Job Mobility

Thomas Cornelissen () and Oloaf Huebler
Authors registered in the RePEc Author Service: Olaf Hübler

Hannover Economic Papers (HEP) from Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät

Abstract: Using data from the German Socio-Economic Panel (GSOEP) we study whether being individually affected by downward wage rigidity has an effect on layoffs, quits and intra-firm mobility. Within a structural empirical model we estimate the individual extent of wage rigidity. This is expressed by the wage sweep-up, which measures by how much individual wage growth increases through the effect of downward wage rigidity when compared to a counterfactual labour market with flexible wage setting. We find robust negative effects of wage sweep-up on quits and layoffs and some evidence for a positive association of wage sweep-up and promotion opportunities. This is consistent with a core-periphery view of the labour force, where a core work force is protected from layoffs and wage cuts and at the same time enjoys good promotion opportunities. On the other side a peripheral work force provides a buffer for adjustment and suffers from both flexible wages, more insecure jobs and less internal promotion opportunities.

Keywords: wage rigidity; wage sweep-up; quits; layoffs; promotions (search for similar items in EconPapers)
JEL-codes: J31 J63 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2006-10
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Downward wage rigidity and job mobility (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:han:dpaper:dp-349

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