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The Incidence of Nominal and Real Wage Rigidity: An Individual-Based Sectoral Approach

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  • Julián Messina
  • Cláudia Filipa Duarte
  • Mario Izquierdo
  • Philip Du Caju
  • Niels Lynggård Hansen

Abstract

This paper presents estimates based on individual data of downward nominal and real wage rigidities for 13 sectors in Belgium, Denmark, Spain, and Portugal. Our methodology follows the approach recently developed for the International Wage Flexibility Project, whereby resistance to nominal and real wage cuts is measured through departures of observed individual wage change histograms from an estimated counterfactual wage change distribution that would have prevailed in the absence of rigidity. Our estimates of wage rigidities are set against structural features of the labour markets studied, including the wage bargaining level and the degree of product market competition. (JEL: J30, E24) (c) 2010 by the European Economic Association.

Suggested Citation

  • Julián Messina & Cláudia Filipa Duarte & Mario Izquierdo & Philip Du Caju & Niels Lynggård Hansen, 2010. "The Incidence of Nominal and Real Wage Rigidity: An Individual-Based Sectoral Approach," Journal of the European Economic Association, MIT Press, vol. 8(2-3), pages 487-496, 04-05.
    • Handle: RePEc:tpr:jeurec:v:8:y:2010:i:2-3:p:487-496
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    More about this item

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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