Evaluating the economic significance of downward nominal wage rigidity

• 成果类型: Article
• 署名作者: Elsby, Michael W. L.
• 署名单位: University of Michigan System; University of Michigan; National Bureau of Economic Research
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2008.12.003
• 发表日期: 2009
• 页码: 154-169
• 关键词: Wage rigidity; unemployment; inflation

摘要

The existence of downward nominal wage rigidity has been abundantly documented, but what are its economic implications? This paper demonstrates that, even when wages are allocative, downward wage rigidity can be consistent with weak macroeconomic effects. Firms have an incentive to compress wage increases as well as wage cuts when downward wage rigidity binds. By neglecting compression of wage increases, previous literature may have overstated the costs of downward wage rigidity to firms. Using micro-data from the US and Great Britain, I find that the evidence for the compression of wage increases when downward wage rigidity binds. Accounting for this reduces the estimated increase in aggregate wage growth due to wage rigidity to be much closer to zero. These results suggest that downward wage rigidity may not provide a strong argument against the targeting of low inflation rates. (C) 2009 Elsevier B.V. All rights reserved.