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The Price is Right? Pay Settlements and Nominal Wage Rigidity in Britain

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  • Donna Brown
  • Peter Ingram
  • Jonathan Wadsworth

Abstract

We examine representative, group‐level wage settlement data to augment the debate on nominal pay rigidity in Britain. We investigate the characteristics of groups that settle at zero and the role of within‐firm and external influences. Nominal settlement cuts are rare. Zero nominal wage settlements are more common, but still relatively unusual, highest during (low‐inflation) recessionary periods. Small groups, above all firms under duress, appear most likely to settle at zero. Once a group settles at zero it is unlikely to do so again in the short run.

Suggested Citation

  • Donna Brown & Peter Ingram & Jonathan Wadsworth, 2004. "The Price is Right? Pay Settlements and Nominal Wage Rigidity in Britain," British Journal of Industrial Relations, London School of Economics, vol. 42(3), pages 507-525, September.
    • Handle: RePEc:bla:brjirl:v:42:y:2004:i:3:p:507-525
    DOI: 10.1111/j.1467-8543.2004.00327.x
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    References listed on IDEAS

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    1. Erica L. Groshen & Mark E. Schweitzer, 1994. "The effects of inflation on wage adjustments in firm-level data: grease or sand?," Working Papers (Old Series) 9418, Federal Reserve Bank of Cleveland.
    2. Vasilev, Aleksandar & Maksumov, Rashid, 2010. "Critical analysis of Chapter 23 of Keynes’s Notes on Mercantilism in The General Theory of Employment, Interest and Money (1936)," EconStor Research Reports 155318, ZBW - Leibniz Information Centre for Economics.
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    Cited by:

    1. Alberto Bayo-Moriones & Jose Enrique Galdon-Sanchez & Sara Martinez-de-Morentin, 2016. "The process of wage adjustment: An analysis using establishment-level data," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 37(2), pages 245-268, May.
    2. Eunbi Kim, 2021. "The Local Labor Market Effects of Korean Automotive Investments in the United States," International Regional Science Review, , vol. 44(6), pages 619-646, November.
    3. Peter Ingram & Neil Rickman & Jonathan Wadsworth, 2013. "Wage claims in the British private sector: 1979–2003," Industrial Relations Journal, Wiley Blackwell, vol. 44(3), pages 296-315, May.
    4. Bayo-Moriones, Alberto & Galdon-Sanchez, Jose Enrique & Martinez-de-Morentin, Sara, 2008. "What Are the Factors Behind Pay Settlements? Evidence from Spanish and British Data," IZA Discussion Papers 3401, Institute of Labor Economics (IZA).
    5. Renuka Metcalfe, 2006. "The Dynamic Wage Barganing Problem," School of Economics Discussion Papers 1106, School of Economics, University of Surrey.

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