Wage rigidity and employment outcomes: Evidence from administrative data
By: Ehrlich, Gabriel and Montes, Joshua
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Material type: 
BookPublisher: American Economic Journal: Macroeconomics Description: 16(1), Jan, 2024: p.147-206.
In:
American Economic Journal: MacroeconomicsSummary: This paper examines the relationship between downward nominal wage rigidity and employment outcomes using linked employer-employee data. Wage rigidity prevents 27.1 percent of counterfactual wage cuts, with a standard deviation of 19.2 percent across establishments. An establishment with the sample-average level of wage rigidity is predicted to have a 3.3 percentage point higher layoff rate, a 7.4 percentage point lower quit rate, and a 2.0 percentage point lower hire rate. Estimating a structural model by indirect inference implies that the cost of a nominal wage cut is 33 percent of an average worker's annual compensation.- Reproduced
https://www.aeaweb.org/articles?id=10.1257/mac.20200125
| Item type | Current location | Call number | Vol info | Status | Date due | Barcode |
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Articles
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Indian Institute of Public Administration | 16(1), Jan, 2024: p.147-206 | Available | AR131319 |
This paper examines the relationship between downward nominal wage rigidity and employment outcomes using linked employer-employee data. Wage rigidity prevents 27.1 percent of counterfactual wage cuts, with a standard deviation of 19.2 percent across establishments. An establishment with the sample-average level of wage rigidity is predicted to have a 3.3 percentage point higher layoff rate, a 7.4 percentage point lower quit rate, and a 2.0 percentage point lower hire rate. Estimating a structural model by indirect inference implies that the cost of a nominal wage cut is 33 percent of an average worker's annual compensation.- Reproduced
https://www.aeaweb.org/articles?id=10.1257/mac.20200125
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