Nominal Wage Rigidity in Village Labor Markets

• 成果类型: Article
• 署名作者: Kaur, Supreet
• 署名单位: University of California System; University of California Berkeley
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20141625
• 发表日期: 2019
• 页码: 3585-3616
• 关键词: agricultural production; inflation; fairness; income; macroeconomics; PRODUCTIVITY; unemployment; stickiness; migration; responses

摘要

This paper develops a new approach to test for downward wage rigidity by examining transitory shocks to labor demand (i.e., rainfall) across 600 Indian districts. Nominal wages rise during positive shocks but do not fall during droughts. In addition, transitory positive shocks generate ratcheting: after they have dissipated, wages do not adjust back down. Ratcheting reduces employment by 9 percent, indicating that rigidities distort employment levels. Inflation, which is unaffected by local rainfall, enables downward real wage adjustments-offering causal evidence for its labor market effects. Surveys suggest that individuals believe nominal wage cuts are unfair and lead to effort reductions.