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Sectoral differences in downward real wage rigidity: workforce composition, institutions, technology and competition

Author

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  • Du Caju, Philip
  • Fuss, Catherine

    (Research Department, National Bank of Belgium ; Université Libre de Bruxelles)

  • Wintr, Ladislav

    (Economics and Research Department, Central Bank of Luxembourg)

Abstract

"This paper examines whether differences in wage rigidity across sectors can be explained by differences in workforce composition, wage-bargaining institutions, technology and competition. We rely on a large administrative matched employer-employee dataset for Belgium over the period 1990 - 2002. Our results indicate that downward real wage rigidity is significantly higher for white-collar workers, lower for older workers and decreases with the level of earnings and bonuses. Beyond labour force composition effects, we find that wages are more rigid in sectors with predominant centralised wage-setting at the sector level as opposed to firm-level agreements. Also, more labour-intensive sectors and competitive sectors have more rigid wages." (Author's abstract, IAB-Doku) ((en))

Suggested Citation

  • Du Caju, Philip & Fuss, Catherine & Wintr, Ladislav, 2012. "Sectoral differences in downward real wage rigidity: workforce composition, institutions, technology and competition," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 45(1), pages 7-22.
    • Handle: RePEc:iab:iabjlr:v:45:i:1:p:007-022
    DOI: 10.1007/s12651-012-0100-3
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    2. Gábor Kátay, 2011. "Downward wage rigidity in Hungary," MNB Working Papers 2011/9, Magyar Nemzeti Bank (Central Bank of Hungary).
    3. Boris Hirsch & Thomas Zwick, 2015. "How Selective Are Real Wage Cuts? A Micro-analysis Using Linked Employer–Employee Data," LABOUR, CEIS, vol. 29(4), pages 327-347, December.
    4. Khoury, Laura, 2023. "Unemployment benefits and redundancies: Incidence and timing effects," Journal of Public Economics, Elsevier, vol. 226(C).
    5. Philip Du Caju & Theodora Kosma & Martina Lawless & Julian Messina & Tairi Rõõm, 2013. "Why firms avoid cutting wages: Survey evidence from European firms," Working Paper Research 251, National Bank of Belgium.
    6. Andrés Rodríguez-Clare & Mauricio Ulate & José P. Vásquez, 2020. "Trade with Nominal Rigidities: Understanding the Unemployment and Welfare Effects of the China Shock," NBER Working Papers 27905, National Bureau of Economic Research, Inc.
    7. Veronika Lukesch & Thomas Zwick, 2024. "Do outside options drive wage inequalities in retained jobs? Evidence from a natural experiment," British Journal of Industrial Relations, London School of Economics, vol. 62(1), pages 127-153, March.
    8. Emmanuel Dhyne & Martine Druant, 2010. "Wages, labor or prices : How do firms react to shocks ?," Working Paper Research 193, National Bank of Belgium.
    9. Daniel Dias & Carlos Marques & Fernando Martins, 2015. "A replication note on downward nominal and real wage rigidity: survey evidence from European firms," Empirical Economics, Springer, vol. 49(3), pages 1143-1152, November.
    10. Pierpaolo Benigno & Luca Antonio Ricci & Paolo Surico, 2015. "Unemployment and Productivity in the Long Run: The Role of Macroeconomic Volatility," The Review of Economics and Statistics, MIT Press, vol. 97(3), pages 698-709, July.
    11. Santoro, Emiliano & Petrella, Ivan & Pfajfar, Damjan & Gaffeo, Edoardo, 2014. "Loss aversion and the asymmetric transmission of monetary policy," Journal of Monetary Economics, Elsevier, vol. 68(C), pages 19-36.
    12. Andres Rodriguez-Clare & Mauricio Ulate & Jose P. Vasquez, 2020. "New-Keynesian Trade: Understanding the Employment and Welfare Effects of Trade Shocks," Working Papers 265, Princeton University, Department of Economics, Center for Economic Policy Studies..
    13. Philip Du Caju & Catherine Fuss & Ladislav Wintr, 2012. "Downward Wage Regidity for Different Workers and Firms," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 55(1), pages 5-32.
    14. Kerndler, Martin, 2017. "Wage flexibility of older workers and the role of institutions - evidence from the German LIAB data set," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168160, Verein für Socialpolitik / German Economic Association.
    15. Fernando Martins, 2013. "Survey evidence on price and wage rigidities in Portugal," Working Papers w201312, Banco de Portugal, Economics and Research Department.
    16. Carlos Robalo Marques & Fernando Martins & Daniel Dias, 2013. "The determinants of downward wage rigidity: Some methodological considerations and new empirical evidence," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.

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    More about this item

    Keywords

    Belgien ; Determinanten ; institutionelle Faktoren ; Lohnstarrheit ; Produktionstechnik ; Reallohn ; sektorale Verteilung ; Arbeitsintensität ; Tarifverhandlungen ; technische Entwicklung ; Arbeitskräftestruktur ; Wettbewerb ; Wirtschaftszweige ; 1990-2002;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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