Non-base wage components as a source of wage adaptability to shocks: evidence from European firms, 2010–2013

Non-base wage components as a source of wage adaptability to shocks: evidence from European firms, 2010–2013

Abstract This paper provides evidence on the role of non-base wage components as a channel for firms to adjust labour costs in the event of adverse shocks. It uses data from a firm-level survey for 25 European countries that covers the period 2010–2013. We find that firms subject to nominal wage rig...

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Main Authors: Jan Babecký, Clémence Berson, Ludmila Fadejeva, Ana Lamo, Petra Marotzke, Fernando Martins, Pawel Strzelecki
Format: Article
Language:English
Published: Sciendo 2019-01-01
Series:IZA Journal of Labor Policy
Subjects:
J30
J32
C81
P5
Online Access:http://link.springer.com/article/10.1186/s40173-018-0106-8
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spelling doaj-154b90e57f63474b804cb0850916b7c12021-05-02T07:02:53ZengSciendoIZA Journal of Labor Policy2193-90042019-01-018111810.1186/s40173-018-0106-8Non-base wage components as a source of wage adaptability to shocks: evidence from European firms, 2010–2013Jan Babecký0Clémence Berson1Ludmila Fadejeva2Ana Lamo3Petra Marotzke4Fernando Martins5Pawel Strzelecki6Czech National BankBanque de FranceLatvijas BankaEuropean Central BankDeutsche BundesbankBanco de PortugalNational Bank of PolandAbstract This paper provides evidence on the role of non-base wage components as a channel for firms to adjust labour costs in the event of adverse shocks. It uses data from a firm-level survey for 25 European countries that covers the period 2010–2013. We find that firms subject to nominal wage rigidities, which prevent them from adjusting base wages, are more likely to cut non-base wage components when they are hit by negative shocks. Firms thus use non-base wage components as a strategic margin to overcome base wage rigidity. We also show that while non-base wage components exhibit some degree of downward rigidity this is smaller than that observed for base wages.http://link.springer.com/article/10.1186/s40173-018-0106-8J30J32C81P5
collection DOAJ
language English
format Article
sources DOAJ
author Jan Babecký
Clémence Berson
Ludmila Fadejeva
Ana Lamo
Petra Marotzke
Fernando Martins
Pawel Strzelecki
spellingShingle Jan Babecký
Clémence Berson
Ludmila Fadejeva
Ana Lamo
Petra Marotzke
Fernando Martins
Pawel Strzelecki
Non-base wage components as a source of wage adaptability to shocks: evidence from European firms, 2010–2013
IZA Journal of Labor Policy
J30
J32
C81
P5
author_facet Jan Babecký
Clémence Berson
Ludmila Fadejeva
Ana Lamo
Petra Marotzke
Fernando Martins
Pawel Strzelecki
author_sort Jan Babecký
title Non-base wage components as a source of wage adaptability to shocks: evidence from European firms, 2010–2013
title_short Non-base wage components as a source of wage adaptability to shocks: evidence from European firms, 2010–2013
title_full Non-base wage components as a source of wage adaptability to shocks: evidence from European firms, 2010–2013
title_fullStr Non-base wage components as a source of wage adaptability to shocks: evidence from European firms, 2010–2013
title_full_unstemmed Non-base wage components as a source of wage adaptability to shocks: evidence from European firms, 2010–2013
title_sort non-base wage components as a source of wage adaptability to shocks: evidence from european firms, 2010–2013
publisher Sciendo
series IZA Journal of Labor Policy
issn 2193-9004
publishDate 2019-01-01
description Abstract This paper provides evidence on the role of non-base wage components as a channel for firms to adjust labour costs in the event of adverse shocks. It uses data from a firm-level survey for 25 European countries that covers the period 2010–2013. We find that firms subject to nominal wage rigidities, which prevent them from adjusting base wages, are more likely to cut non-base wage components when they are hit by negative shocks. Firms thus use non-base wage components as a strategic margin to overcome base wage rigidity. We also show that while non-base wage components exhibit some degree of downward rigidity this is smaller than that observed for base wages.
topic J30
J32
C81
P5
url http://link.springer.com/article/10.1186/s40173-018-0106-8
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