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Asymmetric wage adjustment and employment in European firms

Petra Marotzke, Robert Anderton, Ana Bairrao, Clémence Berson () and Peter Tóth ()
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Robert Anderton: European Central Bank, University of Nottingham

No WP 8/2017, Working and Discussion Papers from Research Department, National Bank of Slovakia

Abstract: We explore the impact of wage adjustment on employment with a focus on the role of downward nominal wage rigidities. We use a harmonised survey dataset, which covers 25 European countries in the period 2010-2013. These data are particularly useful given the firm-level information on the change in economic conditions and collective pay agreements. Our findings confirm the presence of wage rigidities in Europe: first, collective pay agreements reduce the probability of downward wage adjustment; second, wage responses to demand developments are asymmetric with a weaker downward response. Further, estimation results point to a negative effect of downward nominal wage rigidities on employment at the firm level.

Keywords: Wage rigidity; Employment; Demand shocks (search for similar items in EconPapers)
JEL-codes: J23 J30 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec
Date: 2017-10
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Related works:
Working Paper: Asymmetric wage adjustment and employment in European firms (2017) Downloads
Working Paper: Asymmetric wage adjustment and employment in European firms (2017) Downloads
Working Paper: Wage adjustment and employment in Europe (2016) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:svk:wpaper:1049

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