TY - BOOK ID - 133777804 TI - Downward Nominal and Real Wage Rigidity : Survey Evidence From European Firms AU - Babecky, Jan AU - Caju, Philip Du AU - Kosma, Theodora AU - Lawless, Martina AU - Messina, Julian AU - Room, Tairi PY - 2010 PB - Washington, D.C., The World Bank, DB - UniCat KW - Bargaining power KW - Central banks KW - Collective bargaining KW - Efficiency wage theory KW - Employment KW - Environment KW - Environmental Economics & Policies KW - Income KW - Labor Markets KW - Labor markets KW - Labor Policies KW - Labour KW - Labour markets KW - Macroeconomics and Economic Growth KW - Markets and Market Access KW - Nominal wages KW - Real income KW - Real wages KW - Rents KW - Rigid wages KW - Skilled workers KW - Social Protections and Labor KW - Unemployment KW - Wage flexibility KW - Wage increases KW - Wage rigidities KW - Wage rigidity KW - Wages UR - https://www.unicat.be/uniCat?func=search&query=sysid:133777804 AB - It has been well established that the wages of individual workers react little, especially downwards, to shocks that hit their employer. This paper presents new evidence from a unique survey of firms across Europe on the prevalence of downward wage rigidity in both real and nominal terms. The authors analyse which firm-level and institutional factors are associated with wage rigidity. The results indicate that it is related to workforce composition at the establishment level in a manner that is consistent with related theoretical models (e.g. efficiency wage theory, insider-outsider theory). The analysis also finds that wage rigidity depends on the labour market institutional environment. Collective bargaining coverage is positively related with downward real wage rigidity, measured on the basis of wage indexation. Downward nominal wage rigidity is positively associated with the extent of permanent contracts and this effect is stronger in countries with stricter employment protection regulations. ER -