Wage restraint and volatility in labor markets

Daniel Traca

No 05-001.RS, Working Papers CEB from ULB -- Universite Libre de Bruxelles

Abstract: This paper studies the notion that a rise in job insecurity, due to rising labor market uncertainty, leads to wage moderation - the ‘wage restraint hypothesis’. It begins by finding only mixed theoretical support for this hypothesis, as an increase in uncertainty generates an ambiguous effect on wages, although it raises job insecurity. Then, using industry data, it finds evidence of wage restraint, as volatility significantly lowers the share of(production) wages in value added.

Keywords: Job-insecurity; Globalization; Wage Contracts; Volatility. (search for similar items in EconPapers)
JEL-codes: E24 (search for similar items in EconPapers)
Pages: 28 p.
Date: 2005-03
New Economics Papers: this item is included in nep-lab and nep-mac
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Published by: Centre Emile Bernheim

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