Working Paper: CEPR ID: DP7932
Authors: Sanvi Avouyidovi; Denis Fougre; Erwan Gautier
Abstract: Using several unique data sets on wage agreements at both the firm- and the industry-levels in France, we examine the impact of typical European wage-setting institutions on the form and the degree of wage rigidity. We highlight different stylized facts concerning wage stickiness. First, in France, the typical duration of a wage agreement is one year. Consequently, a Taylor (1980) -type model appears to reproduce appropriately the distribution of agreement durations. Some 30 percent of settlements stipulate several predetermined wage changes during the year following the date of signature of the agreement. The frequency of wage agreements is highly seasonal, but the dates at which agreements take effect are more staggered. The date at which the national minimum wage level is revised each year has a significant impact on the timetable of wage agreements, both at the firm- and at the industry-levels. Wage increases negotiated at these two levels mainly depend on the inflation regime, the firm profitability and the proportion of minimum-wage workers in the same industry.
Keywords: downward nominal wage rigidity; minimum wage; wage bargaining; wage stickiness
JEL Codes: E30; J31; J50
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| duration of wage agreements (J38) | wage rigidity (J31) |
| inflation (E31) | wage increases (J38) |
| firm profitability (L21) | wage increases (J38) |
| local unemployment (J64) | wage increases (J38) |
| NMW (J89) | timing and occurrence of wage agreements (J52) |
| percentage of minimum-wage workers (J38) | frequency of wage agreements (J52) |
| annual NMW revision (J38) | timing of negotiations (F51) |
| wage bargaining calendar (J52) | timing of negotiations (F51) |