The Margins of Labour Cost Adjustment: Survey Evidence from European Firms

Arbeitspapier

Firms have multiple options at the time of adjusting their wage bills. However, previous literature has mainly focused on base wages. We broaden the analysis beyond downward rigidity in base wages by investigating the use of other margins of labour cost adjustment at the firm level. Using data from a unique survey, we find that firms make frequent use of other, more flexible, components of compensation to adjust the cost of labour. Changes in bonuses and non-pay benefits are some of the potential margins firms use to reduce costs. We also show how the margins of adjustment chosen are affected by firm and worker characteristics.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECB Working Paper ; No. 1106

Classification and Topics

• Classification: Wirtschaft ; Wages, Compensation, and Labor Costs: General ; Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
• Subject: European Union ; firm survey ; labour costs ; wage rigidity ; Arbeitskosten ; Vergütungssystem ; EU-Staaten

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Babecký, Jan ; Du Caju, Philip ; Kosma, Theodora ; Lawless, Martina ; Messina, Julián ; Rõõm, Tairi
• Event: Veröffentlichung
• (who): European Central Bank (ECB)
• (where): Frankfurt a. M.
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/153540
• Last update: 10.03.2025, 11:41 AM CET