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Wage Rigidities and Jobless Recovery in Slovakia: New Survey Evidence

Author

Listed:
  • Peter Toth

    (National Bank of Slovakia, Research Department)

  • Katarina Valkova

    (WU Wirtschaftsuniversität Wien)

Abstract

The aim of this paper is to test the determinants of labour cost adjustments by Slovak firms during the recent recovery period from 2010 to 2013. We use a new dataset from a firm-level survey, which was conducted in cooperation with the Wage Dynamics Network of the European Central Bank. The main findings are broadly in line with macroeconomic data, such as the uneven recovery of demand across sectors, stagnation of employment and increase in wages. Our estimates highlight the importance of demand shocks in explaining labour cost adjustments. Further, the role of collective agreements and wage rigidities seems crucial, which forces firms to downsize their labour inputs rather than to cut wages. Finally, we find evidence that large and foreign owned firms face fewer barriers to adjusting their labour costs. The mentioned factors seem to be the main explanation for the recent jobless recovery in Slovakia during 2010 to 2013.

Suggested Citation

  • Peter Toth & Katarina Valkova, 2015. "Wage Rigidities and Jobless Recovery in Slovakia: New Survey Evidence," Working and Discussion Papers OP 3/2015, Research Department, National Bank of Slovakia.
    • Handle: RePEc:svk:wpaper:1036
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    More about this item

    Keywords

    labour cost adjustment; firm-level survey; collective bargaining; wage rigidities; adjustment costs;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access

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