Real and nominal wage rigidities and the rate of inflation : evidence from West German micro data

Arbeitspapier

The paper examines real and nominal wage rigidities. We estimate a switching regime model, in which the observed distribution of individual wage changes, computed from West German register data for 1976-1997, is generated by simultaneous processes of real, nominal or no wage rigidity, and measurement error. The fraction of workers facing wage increases that are due to nominal, but mostly real wage rigidity is substantial. The extent of real rigidity rises with inflation, whereas the opposite holds for nominal rigidity. Overall, the incidence of wage rigidity, which accelerates unemployment growth, is most likely minimized in an environment with moderate inflation.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 959

Classification and Topics

• Classification: Wirtschaft ; Monetary Policy ; Trade Unions: Objectives, Structure, and Effects ; Wage Level and Structure; Wage Differentials
• Subject: downward wage rigidity ; real effects of inflation ; collective bargaining ; switching regime model ; West Germany ; Lohnrigidität ; Reallohn ; Inflationsrate ; Tarifpolitik ; Schätzung ; Deutschland ; Alte Bundesländer ; regime switching model

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bauer, Thomas K. ; Bonin, Holger ; Sunde, Uwe
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2003

Further information

• Handle: http://hdl.handle.net/10419/20195
• Last update: 10.03.2025, 11:44 AM CET