How Prevalent Is Downward Rigidity in Nominal Wages? International Evidence from Payroll Records and Pay Slips
For more than 80 years, many macroeconomic analyses have been premised on the assumption that workers' nominal wage rates cannot be cut. Contrary evidence from household surveys reasonably has been discounted on the ground that the measurement of frequent wage cuts might be an artifact of reporting error. This article summarizes a more recent wave of studies based on more accurate wage data from payroll records and pay slips. By and large, these studies indicate that, except in extreme circumstances (when nominal wage cuts are either legally prohibited or rendered beside the point by very high inflation), nominal wage cuts from one year to the next appear quite common, typically affecting 15-25 percent of job stayers in periods of low inflation.
Year of publication: |
2019
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Authors: | Elsby, Michael ; Solon, Gary |
Publisher: |
Bonn : Institute of Labor Economics (IZA) |
Subject: | nominal wage rigidity | payroll records |
Saved in:
freely available
Series: | IZA Discussion Papers ; 12125 |
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Type of publication: | Book / Working Paper |
Type of publication (narrower categories): | Working Paper |
Language: | English |
Other identifiers: | 1067411712 [GVK] hdl:10419/196623 [Handle] RePEc:iza:izadps:dp12125 [RePEc] |
Classification: | J3 - Wages, Compensation, and Labor Costs ; E24 - Employment; Unemployment; Wages |
Source: |
Persistent link: https://www.econbiz.de/10012005826