Stüber H, Beissinger T (2012)
Publication Status: Published
Publication Type: Journal article, Original article
Publication year: 2012
Publisher: ELSEVIER SCIENCE BV
Book Volume: 56
Pages Range: 870-887
Journal Issue: 4
DOI: 10.1016/j.euroecorev.2012.02.013
Focusing on the compression of wage cuts, many empirical studies find a high degree of downward nominal wage rigidity (DNWR). However, the resulting macroeconomic effects seem to be surprisingly weak. This contradiction can be explained within an intertemporal framework in which DNWR not only prevents nominal wage cuts but also induces firms to compress wage increases. We analyze whether a compression of wage increases occurs when DNWR is binding by applying Unconditional Quantile Regression and Seemingly Unrelated Regression to a dataset comprising more than 169 million wage changes. We find evidence of a compression of wage increases and only very small effects of DNWR on average real wage growth. The results indicate that DNWR does not provide a strong argument against low inflation targets. (C) 2012 Elsevier B.V. All rights reserved.
APA:
Stüber, H., & Beissinger, T. (2012). Does downward nominal wage rigidity dampen wage increases? European Economic Review, 56(4), 870-887. https://dx.doi.org/10.1016/j.euroecorev.2012.02.013
MLA:
Stüber, Heiko, and Thomas Beissinger. "Does downward nominal wage rigidity dampen wage increases?" European Economic Review 56.4 (2012): 870-887.
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