Downward Nominal Wage Rigidity in a Cross Section: An Analysis of Linked Employer-Employee Data for the Years 1995 to 2007

Applying unconditional quantile regression to a linked employer-employee dataset from Germany, I show that downward nominal wage rigidity (DNWR) affects workers not only at the lower tail of the wage change distribution but over the entire distribution. The effect of the inflation rate on the workers' wage changes differs between and within the percentiles of the wage change distribution. The effect is conditional on the workers' individual characteristics and on the firm characteristics, and the conditional effects also differ over the wage change distribution.