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Does wage rigidity really exist? New evidence from US panel data

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  • von Blanckenburg, Korbinian
  • Geist, Alexander
  • Schmidt, Jörg

Abstract

Downward nominal wage rigidity (DNWR) could prevent real wage adjustments in times of low inflation rates. Nominal wage rigidity based on annual wages can at least be reduced, if the number of working hours is considered. This leads to a lower degree of DNWR in hourly wage changes. In this paper, we use a histogram-location approach to investigate to what extent annual as well as hourly wages are subject to downward nominal wage rigidity. Using data from the Panel Study of Income Dynamics (PSID) we find that annual wage changes exhibit a substantially higher level of wage rigidity than hourly wage changes which also holds for males compared to females.

Suggested Citation

  • von Blanckenburg, Korbinian & Geist, Alexander & Schmidt, Jörg, 2009. "Does wage rigidity really exist? New evidence from US panel data," CAWM Discussion Papers 13, University of Münster, Münster Center for Economic Policy (MEP).
    • Handle: RePEc:zbw:cawmdp:13
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    References listed on IDEAS

    as
    1. Christoph Knoppik & Thomas Beissinger, 2003. "How Rigid are Nominal Wages? Evidence and Implications for Germany," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(4), pages 619-641, December.
    2. Christoph Knoppik & Thomas Beissinger, 2009. "Downward nominal wage rigidity in Europe: an analysis of European micro data from the ECHP 1994–2001," Empirical Economics, Springer, vol. 36(2), pages 321-338, May.
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    More about this item

    Keywords

    Wage Rigidity; Histogram-Location Approach;

    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
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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