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Wage Rigidities and Jobless Recovery in Slovakia: New Survey Evidence

Peter Tóth () and Katarina Valkova
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Katarina Valkova: WU Wirtschaftsuniversität Wien

No OP 3/2015, Working and Discussion Papers from Research Department, National Bank of Slovakia

Abstract: The aim of this paper is to test the determinants of labour cost adjustments by Slovak firms during the recent recovery period from 2010 to 2013. We use a new dataset from a firm-level survey, which was conducted in cooperation with the Wage Dynamics Network of the European Central Bank. The main findings are broadly in line with macroeconomic data, such as the uneven recovery of demand across sectors, stagnation of employment and increase in wages. Our estimates highlight the importance of demand shocks in explaining labour cost adjustments. Further, the role of collective agreements and wage rigidities seems crucial, which forces firms to downsize their labour inputs rather than to cut wages. Finally, we find evidence that large and foreign owned firms face fewer barriers to adjusting their labour costs. The mentioned factors seem to be the main explanation for the recent jobless recovery in Slovakia during 2010 to 2013.

Keywords: labour cost adjustment; firm-level survey; collective bargaining; wage rigidities; adjustment costs (search for similar items in EconPapers)
JEL-codes: C81 E24 J30 J50 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2015-12
New Economics Papers: this item is included in nep-mac and nep-tra
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