Wage Rigidity

Wage Rigidity

The general difficulty a company experiences in trying to reduce wages. Whether because of a labor agreement, fears for lost productivity or other reasons, companies often find it hard to reduce employee wages or salaries. For this reason, many (though far from all) companies elect to conduct layoffs rather than wage reductions when facing losses or lower profits. See also: Wage resistance.
References in periodicals archive ?
For theoretical models that endogenize the nominal wage rigidity see, for example, Gray [1978].
and European performance could be traced to wage adjustment; the United States experienced "nominal wage rigidity," while Europe suffered from "real wage rigidity.
Over the past decade, economists have developed efficiency wage models to explain the presence of wage rigidity and thus of involuntary unemployment.
Wage Rigidity, Union Activity and Unemployment," in Wage Rigidity & Unemployment, edited by W.
Edmund Phelps attempts to persuade the reader that there is "structural alternative" to the Keynesian model, based on real wage rigidity.
Persistent wage rigidity and involuntary unemployment appear to be recurrent problems in most economies.
There have been no attempts to measure marginal wage rigidity directly, but this is not surprising.
First, wage rigidity in the contracting sector is responsible for a non-neutral response to aggregate demand shocks in both sectors.
But one theory I should have mentioned involves what economists call "downward nominal wage rigidity.
But if downward wage rigidity is to hinder the downward adjustment of wages during a downturn, one would expect to find a larger increase in the incidence of zero wage changes during recent recessions than in the past, yet this is a feature that, as we document, is absent in the data.
This high disparity of the wage rigidity indicator across the country proves that "one size does not fill all.
First and as stated before, our model also considers endogenous wage rigidity (through the dependence of the threat point on unemployment benefits and the dependence of the latter on past wages) and imperfect insurance (see Supporting Information).