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Asymmetries and Rigidities in Wage Adjustments by Firms

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Author Info
Holzer, Harry J
Montgomery, Edward B

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Abstract

The authors use micro data from a survey of firms to test for labor-market rigidities and asymmetries in response to demand shifts. They analyze wage and employment adjustments to positive and negative shifts as measured by real sales growth. The results show that wage adjustments are fairly small compared with employment adjustments. They are also asymmetric, with significant adjustments in response to positive shifts but not negative shifts. These asymmetries are no more pronounced in large firms, manufacturing, heavily-union, or highly-skilled industries than in other firms or industries. In contrast, employment adjustments show no consistent pattern of asymmetry. Copyright 1993 by MIT Press.

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Publisher Info
Article provided by MIT Press in its journal Review of Economics & Statistics.

Volume (Year): 75 (1993)
Issue (Month): 3 (August)
Pages: 397-408
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Handle: RePEc:tpr:restat:v:75:y:1993:i:3:p:397-408

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  3. Taylor, John B, 1980. "Aggregate Dynamics and Staggered Contracts," Journal of Political Economy, University of Chicago Press, vol. 88(1), pages 1-23, February. [Downloadable!] (restricted)
  4. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-93, March. [Downloadable!] (restricted)
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  6. Lawrence F. Katz, 1986. "Efficiency Wage Theories: A Partial Evaluation," NBER Working Papers 1906, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Dunne, T. & Roberts, M.J. & Samuelson L., 1988. "Plant Turnover And Gross Employment Flows In The U.S. Manufacturing Sector," Papers 9-87-7, Pennsylvania State - Department of Economics.
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  8. Montgomery, Edward & Shaw, Kathryn, 1988. "The real wage-employment relationship : An industry analysis," Economics Letters, Elsevier, vol. 26(3), pages 241-246. [Downloadable!] (restricted)
  9. Raff, Daniel M G & Summers, Lawrence H, 1987. "Did Henry Ford Pay Efficiency Wages?," Journal of Labor Economics, University of Chicago Press, vol. 5(4), pages S57-86, October. [Downloadable!] (restricted)
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  10. Laurence Ball & N. Gregory Mankiw & David Romer, 1988. "The New Keynsesian Economics and the Output-Inflation Trade-off," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(1988-1), pages 1-82. [Downloadable!]
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  12. Harry J. Holzer, 1990. "Wages, Employer Costs, and Employee Performance in the Firm," NBER Working Papers 2830, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  13. Holzer, Harry J & Katz, Lawrence F & Krueger, Alan B, 1991. "Job Queues and Wages," The Quarterly Journal of Economics, MIT Press, vol. 106(3), pages 739-68, August. [Downloadable!] (restricted)
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  15. Blanchflower, David G & Oswald, Andrew J & Garrett, Mario D, 1990. "Insider Power in Wage Determination," Economica, London School of Economics and Political Science, vol. 57(226), pages 143-70, May. [Downloadable!] (restricted)
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  16. Garber, Steven, 1989. "The reserve-labor hypothesis, short-run pricing theories, and the employment-output relationship," Journal of Econometrics, Elsevier, vol. 42(2), pages 219-245, October. [Downloadable!] (restricted)
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  22. Holmstrom, Bengt, 1983. "Equilibrium Long-Term Labor Contracts," The Quarterly Journal of Economics, MIT Press, vol. 98(3), pages 23-54, Supplemen. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Philip Arestis & Iris Biefang-Frisancho Mariscal, . "Capital Shortages and Asymmetries in UK Unemployment," Working Papers 9607, University of East London, Department of Economics. [Downloadable!]
    Other versions:
  2. Erica L. Groshen & Mark E. Schweitzer, 1996. "Macro- and microeconomic consequences of wage rigidity," Working Paper 9607, Federal Reserve Bank of Cleveland. [Downloadable!]
  3. Ana Rute Cardoso & Miguel Portela, 2005. "The Provision of Wage Insurance by the Firm: Evidence from a Longitudinal Matched Employer-Employee Dataset," IZA Discussion Papers 1865, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  4. Erica L. Groshen & Mark E. Schweitzer, 1996. "The effects of inflation on wage adjustments in firm-level data: grease or sand?," Staff Reports 9, Federal Reserve Bank of New York. [Downloadable!]
    Other versions:
  5. Anabela Carneiro & Pedro Portugal, 2006. "Market Power, Dismissal Threat and Rent Sharing: The Role of Insider and Outsider Forces in Wage Bargaining," IZA Discussion Papers 2102, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  6. Lucia Foster, 1999. "Employment Adjustment Costs and Establishment Characteristics," Working Papers 99-15, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
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