scholarly journals Nominal Wage Rigidity in Village Labor Markets

2019 ◽  
Vol 109 (10) ◽  
pp. 3585-3616 ◽  
Author(s):  
Supreet Kaur
Keyword(s):  
Labor Markets ◽  
Labor Demand ◽  
Wage Rigidity ◽  
Nominal Wage ◽  
New Approach ◽  
Market Effects ◽  
Transitory Shocks ◽  
Nominal Wage Rigidity ◽  
Wage Cuts ◽  
Local Rainfall

This paper develops a new approach to test for downward wage rigidity by examining transitory shocks to labor demand (i.e., rainfall) across 600 Indian districts. Nominal wages rise during positive shocks but do not fall during droughts. In addition, transitory positive shocks generate ratcheting: after they have dissipated, wages do not adjust back down. Ratcheting reduces employment by 9 percent, indicating that rigidities distort employment levels. Inflation, which is unaffected by local rainfall, enables downward real wage adjustments—offering causal evidence for its labor market effects. Surveys suggest that individuals believe nominal wage cuts are unfair and lead to effort reductions. (JEL E24, E31, J23, J31, O15, O18, R23)

scholarly journals Wage Rigidity in Canadian Collective Bargaining Agreements

ILR Review ◽  
2003 ◽  
Vol 56 (3) ◽  
pp. 429-448 ◽  
Author(s):  
Louis N. Christofides ◽  
Thanasis Stengos
Keyword(s):  
Labor Market ◽  
Real Wage ◽  
No Reduction ◽  
Wage Rigidity ◽  
Nominal Wage ◽  
Sample Period ◽  
Labor Market Conditions ◽  
Nominal Wage Rigidity ◽  
Wage Cuts ◽  
Search Information

The authors search information on the provisions of 10,947 wage contracts signed in the Canadian unionized sector between 1976 and 1999 for evidence of downward nominal wage rigidity (the disinclination of wages to fall, in nominal dollars, below their established level). Over the sample period, real wage reductions were common, but nominal wage reductions were rare. The probability of downward nominal wage rigidity increased substantially during low-inflation periods. During such periods, apparently there was no reduction in the incidence of real wage cuts, but the magnitude of those cuts was modest, suggesting a lesser ability of wages to adjust to labor market conditions than at other times.

The Firm, Wage Indexation, and Nominal Wage Rigidity

2016 ◽  
Author(s):  
James M. Holmes ◽  
John M. Holmes ◽  
Patricia A. Hutton
Keyword(s):  
Wage Rigidity ◽  
Nominal Wage ◽  
Wage Indexation ◽  
Nominal Wage Rigidity

Downward Nominal Rigidity in West German Earnings, 1975-95

2001 ◽  
Vol 2 (4) ◽  
pp. 385-417 ◽  
Author(s):  
Thomas Beissinger ◽  
Christoph Knoppik
Keyword(s):  
Business Cycle ◽  
Analytical Framework ◽  
Wage Rigidity ◽  
Nominal Wage ◽  
Symmetry Approach ◽  
Nominal Rigidity ◽  
Inflation Targets ◽  
Nominal Wage Rigidity ◽  
Time Invariant

Abstract If downward nominal wage rigidity exists, it should affect the distribution of earnings changes. We present a common analytical framework for three distinct and previously unconnected approaches to the analysis of downward nominal rigidity, the skewness±location approach, the symmetry approach and the histogram±location approach. We modify them by dropping the assumption of time-invariant rigidity and apply them to earnings data from the IABB-escha Èftigtenstichprobe (IABS). We find that the distribution of West German log earnings changes is indeed affected by downward nominal rigidity. Our modification of the approaches also allows us to find that the degree of nominal rigidity depends on business cycle conditions, with weaker rigidity in times of rising unemployment. Our findings support the critics of very low inflation targets.

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