How Sticky Wages in Existing Jobs Can Affect Hiring (original) (raw)
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Some Evidence on the Importance of Sticky Wages
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of LaborSome Evidence on the Importance of Sticky Wages
2012
Any opinions expressed here are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but the institute itself takes no institutional policy positions. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. IZA Discussion Papers often represent preliminary work and are circulated to enco...
Macro- and Microeconomic Consequences of Wage Rigidity
SSRN Electronic Journal, 1996
This article reviews a well-established macroeconomic literature-wage rigidity-from the perspective of human resource managers and economic researchers. As we demonstrate, human resource policies can subtly alter the rigidity of wages. Fortunately, the potential existence and impact of wage rigidities has long been an active area of economic research whose results can be used to guide human resource managers policy reviews.
Wage posting: evidence from job ads
Canadian Journal of Economics, 2012
Recent studies of search theory examine how employers use a wage-setting mechanism-either by bargaining or through the posting of a non-negotiable wage offer in a job ad-to facilitate search. We contribute to this literature by examining wage posting in job ads in the US, the UK, and Slovenia. Despite considerable differences in the incidence of wage posting, employers in all three markets are less likely to post a wage offer when searching for skilled workers. The decision on whether or not to post a wage offer is only weakly related to the outcomes of employers' search. JEL classification: J23, M51 L'annonce du salaire : résultatsà partir des annonces d'emplois. Desétudes récentes de la théorie de la recherche d'employés examinent comment les employeurs utilisent le mécanisme de détermination des salaires-soit par marchandage, soit en mentionnant une offre de salaire non-négociable dans l'annonce de l'offre d'emploi-pour faciliter le processus de recherche. On examine les salaires mentionnés dans les annonces d'offre d'emplois auxÉtats-Unis, au Royaume-Uni, et en Slovénie. Malgré des différences considérables dans l'incidence de l'annonce du salaire, les employeurs dans ces trois marchés sont moins susceptibles d'annoncer un salaire quand ils cherchent des travailleurs qualifiés. La décision d'annoncer un salaire ou non est seulement faiblement reliée aux résultats de la recherche des employeurs. The author wishes to thank two referees for many helpful comments which have significantly improved the paper.
Determinants of wage stickiness in a developing economy
Economic Modelling, 2014
We explore wage flexibility in a developing country and compare our results to what has been found in similar studies using European data. In particular, we conduct a survey of 1189 firms in Pakistan to analyze the determinants of wage rigidity. We find that the existence of competitive wages and an interaction with the informal economy are statistically significant determinants of wage stickiness. While the role of competitive wages is similar to what has been found in studies of European firms, the latter find a much larger role for turnover, collective bargaining and employment protection. In contrast, in Pakistan we find that firms hiring from the informal sector are significantly more flexible in changing their wages. This suggests that the informal sector adds to the wage flexibility of the formal sector.
Wage Rigidity: Measurement, Causes and Consequences
The Economic Journal, 2007
Wage rigidity-the observation that wages cannot be adjusted downwards-has important implications for labour markets and macroeconomic performance. Empirical evidence on the extent, causes and consequences of wage rigidity on the individual level is relatively scant, however. This Feature presents articles that apply a new methodology to estimate the incidence and extent of nominal and real wage rigidity among the employed in three major European countries (Germany, Italy and Great Britain). The results document the pervasiveness of nominal and, particularly, real wage rigidity in different institutional and economic environments, and a recent decline in real wage rigidity. * The views expressed in this article are solely those of the authors and are not those of the Federal Reserve System or the Federal Reserve Bank of Boston. 1 See, for example the recent contributions on the propagation of monetary shocks (
Labour Economics, 2012
This paper contains research conducted within the Wage Dynamics Network (WDN). The WDN is a research network consisting of economists from the European Central Bank (ECB) and the national central banks (NCBs) of the EU countries. The WDN aims at studying in depth the features and sources of wage and labour cost dynamics and their implications for monetary policy. The specific objectives of the network are: i) identifying the sources and features of wage and labour cost dynamics that are most relevant for monetary policy and ii) clarifying the relationship between wages, labour costs and prices both at the firm and macro-economic level.
Wage Rigidity: Micro and Macro Evidence on Labor Market Adjustment in the Modern Sector
World Bank Economic Review, 1989
Aggregate data on wages and employment may provide misleading indicators of labor market conditions. They may suggest inappropriate wage policies in the face of the rising unemployment experienced in many developing countries during the 1980s. Such increases in unemployment are often attributed to wage rigidities. A cursory review of aggregate data for the modern sector in C6te dIvoire would support this view, suggesting that employment declined during the 1979-84 recession due to an increase in real wages. Examination of disaggregated data from two labor force censuses of the modern sector, however, shows that real wages declined for specified classes of labor. The work force was characterized by greater education, training, and experience; workers with a given level of attributes received a lower real wage by the end of the recession than before it. Despite this drop in real wages, employment in the modern sector declined.