Title: Nominal Wage Rigidity in Europe: estimates and institutional causes.
Abstract: In this paper we construct and compare dierent measures of nom- inal wage rigidity for the EU countries using the 1994-2000 waves of the European Community Household Panel. The observed distribu- tions of nominal wage changes show a relevant percentage of nominal wage cuts and freezes across countries. When measurement error is taken into account in an econometric model of wage changes appro- priately estimated, it explains almost the totality of wage cuts ob- served. Therefore the extent of nominal wage rigidity is quite high in Europe. Institutional causes of wage rigidity are investigated, …nd- ing an hump-shaped relationship between nominal wage ‡exibility and both employment protection legislation and coordination. On the other hand, an u-shaped impact of union coverage on measures of downward wage rigidity is found .
Publication Year: 2005
Publication Date: 2005-01-01
Language: en
Type: preprint
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Cited By Count: 5
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