Labor Cost Adjustment: Evidence From a Survey of Slovak Firms

Marianna Cervena

No WP 4/2012, Working and Discussion Papers from Research Department, National Bank of Slovakia

Abstract: Building on a unique survey of how Slovak firms adjust wages and prices, this paper studies the reduction of labour costs in two forms: base wage cuts and alternative margins for labour cost reduction. Anecdotal evidence suggests that wage-cutting by firms occurs more frequently in Slovakia than in any other country and that the use of alternative margins for labour cost reduction is also quite prevalent in Slovakia. Regression results support the strong relationship between the use of alternative margins and wage rigidities. I find that the use of any alternative margin is on average 30% more likely in firms facing nominal wage rigidity that in firms with flexible wages.

Keywords: nominal and real wage rigidity; alternative margins for labour cost cutting; survey evidence (search for similar items in EconPapers)
JEL-codes: C81 E24 J30 J50 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2012-06
New Economics Papers: this item is included in nep-hme, nep-lab and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:svk:wpaper:1019

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