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Aurelijus Dabusinskas

31 March 2010
WORKING PAPER SERIES - No. 1164
Details
Abstract
This paper analyses information from survey data collected in the framework of the Eurosystem's Wage Dynamics Network (WDN) on patterns of firm-level adjustment to shocks. We document that the relative intensity and the character of price vs. cost and wage vs. employment adjustments in response to cost-push shocks depend
JEL Code
J31 : Labor and Demographic Economics→Wages, Compensation, and Labor Costs→Wage Level and Structure, Wage Differentials
J38 : Labor and Demographic Economics→Wages, Compensation, and Labor Costs→Public Policy
P50 : Economic Systems→Comparative Economic Systems→General
Network
Wage dynamics network
16 May 2011
WORKING PAPER SERIES - No. 1340
Details
Abstract
The time series of various economic variables often exhibit asymmetry: decreases in the values tend to be sharp and fast, whereas increases usually occur slowly and gradually. We detect signs of an analogous asymmetry in firms' wage setting behaviour on the basis of managerial surveys, with employers tending to react faster to negative than to positive shocks in the same variables. As well as describing the presence of asymmetry in the speed of wage adjustment, we investigate which companies are more likely to demonstrate it in their behaviour. For this purpose, we apply the Heckman selection model and develop a methodology that improves identification by exploiting heteroscedasticity in the selection equation. The estimation results imply that companies operating in a more competitive environment have a higher propensity to react asymmetrically. We also find that businesses relying on labour-intensive production technology are more likely to react faster to negative shocks. Both of these findings support the hypothesis that this behaviour results from companies' attempts to protect profit margins.
JEL Code
J30 : Labor and Demographic Economics→Wages, Compensation, and Labor Costs→General
J31 : Labor and Demographic Economics→Wages, Compensation, and Labor Costs→Wage Level and Structure, Wage Differentials
J33 : Labor and Demographic Economics→Wages, Compensation, and Labor Costs→Compensation Packages, Payment Methods
Network
Wage dynamics network