Ehrlich, Gabriel  and Montes, Joshua   <br/><br/>
Wage rigidity and employment outcomes: Evidence from administrative data 

 - American Economic Journal: Macroeconomics   
 - 16(1), Jan, 2024: p.147-206 
<br/><br/> 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 <br/><br/>https://www.aeaweb.org/articles?id=10.1257/mac.20200125<br/>