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Survey Evidence on Wage Rigidity: Sweden in the 1990s

Jonas Agell and Per Lundborg

No 154, Working Paper Series from Trade Union Institute for Economic Research

Abstract: We present the results from a repeat survey on wage rigidity in a sample of 159 Swedish firms, conducted during a prolonged period of very high unemployment and very low inflation. We document the virtual absence of wage cuts, and trace this pervasive nominal rigidity to a set of interacting factors, including the legal status of the wage contract, the structure of bargaining institutions, and the design of social insurance. But employees’ concerns about fairness and relative wages also appear to play an important role. In addition, we report new results on underbidding, efficiency wage mechanisms, and unemployment persistence.

Keywords: Nominal wage rigidity; Panel data; Recession; Effort models; Unemployment persistence (search for similar items in EconPapers)
JEL-codes: E24 J41 J63 (search for similar items in EconPapers)
Pages: 31 pages
Date: 1999-10-22
New Economics Papers: this item is included in nep-his and nep-lab
Note: This paper is a revised version of Working Paper 1999:2 of the Office of Labour Market Policy Evaluation, IFAU, and Working Paper 1999:12 of Department of Economics, Uppsala University.
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Published in Scandinavian Journal of Economics, 2003, pages 15-29.

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