Sticky Wages . Evidence from Quarterly Microeconomic Data

Abstract

This paper documents nominal wage stickiness using an original quarterly …rm-level dataset. We use the ACEMO survey, which reports the base wage for up to 12 employee categories in French …rms over the period 1998 to 2005, and obtain the following main results. First, the quarterly frequency of wage change is around 35 percent. Second, there is some downward rigidity in the base wage. Third, wage changes are mainly synchronized within …rms but to a large extent staggered across …rms. Fourth, standard Calvo or Taylor schemes fail to match micro wage adjustment patterns, but …xed duration ’Taylor-like’wage contracts are observed for a minority of …rms. Based on a two-thresholds sample selection model, we perform an econometric analysis of wage changes. Our results suggest that the timing of wage adjustments is not state-dependent, and are consistent with existence of predetermined of wage changes. They also suggest that both backwardand forward-looking behavior is relevant in wage setting. JEL codes: E24, J3 Keywords: Wage stickiness, wage predetermination. This paper was prepared in the context of the Eurosystem Wage Dynamics Network. The views expressed in this paper do not necessarily re‡ect the opinion of the Banque de France. Excellent research assistance by Laurent Baudry and Sylvie Tarrieu is gratefully acknowledged. We thank an anonymous referee of the ECB working paper series, Alex Cukierman, Erwan Gautier, Sébastien Roux, Patrick Sevestre and many colleagues within the WDN, as well as participants to seminars at the Banque de France, the ECB, the University of Cergy for their comments and suggestions. Banque de France, Direction de la Recherche at the time this research was carried. Banque de France, Direction de la Recherche, DGEI-DIR-Rec…n 41-1391, 31 rue Croix-des-petits-champs, 75049 Paris Cedex 01, France (e-mail: herve.lebihan@banque-france.fr) Banque de France, Direction de la Recherche (e-mail: jeremi.montornes@banque-france.fr).

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