Non-parametric identification of the extent of downward wage rigidities

Paris Nearchou

University of Cyprus Working Papers in Economics from University of Cyprus Department of Economics

Abstract: We study the problem of identification of measures of the extent of individual types of downward wage rigidity from micro-level data on nominal wage growth rates, in the context of a wage adjustment process that may feature any number such rigidity types. For that purpose we develop a comprehensive framework for the modelling and measurement of wage rigidities in general. We show that the presence of measurement error does not alter fundamentally the nature of this identification problem, and develop an identification strategy that is applicable with measurement-error-free and measurement-error-contaminated data. This relies on weaker restrictions than those usually employed in the literature, including being non-parametric.

Keywords: downward wage rigidity; identification; censoring; measurement error (search for similar items in EconPapers)
JEL-codes: C24 J31 (search for similar items in EconPapers)
Pages: 71 pages
Date: 2018-12
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Persistent link: https://EconPapers.repec.org/RePEc:ucy:cypeua:18-2018

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