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Wage incentives and wage rigidity: A representative view from within
Stockholm University, Faculty of Social Sciences, Department of Economics.
2007 (English)In: Labour Economics, ISSN 0927-5371, Vol. 14, no 3, 347-369 p.Article in journal (Refereed) Published
Abstract [en]

A recent literature has used surveys of those who set wages to learn about the nature of wage incentives and the sources of wage rigidity. Methodologically, we overcome many of the objections that have been raised against this work. Substantively, we find that: (i) the reasons for real wage rigidity differ significantly between large and small firms, and between the high- and low-end of the labor market; (ii) efficiency wage mechanisms reinforce rigidities due to worker bargaining power; (iii) money illusion is a widespread phenomenon across all segments of the labor market; (iv) unions reinforce nominal wage rigidities due to external pay comparisons; (v) there appears to be gender differences in pay bargaining and work morale.

Place, publisher, year, edition, pages
2007. Vol. 14, no 3, 347-369 p.
Keyword [en]
wage rigidity, wage incentives, survey evidence, matched data, behavioral macroeconomics
National Category
Economics and Business
URN: urn:nbn:se:su:diva-56228DOI: 10.1016/j.labeco.2006.04.002ISI: 000246651900004OAI: diva2:410090
authorCount :2Available from: 2011-04-12 Created: 2011-04-12 Last updated: 2011-04-12Bibliographically approved

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