Do Sticky Wages Matter? New Evidence from Matched Firm-Survey and Register Data
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Date
2021-10-07Type
- Conference Paper
ETH Bibliography
yes
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Abstract
We study wage rigidity using novel data on contractual wages from a Swiss firm survey, matched with income and the employment history from social security register data. We exploit the discontinuity around the origin of the employee-level wage growth distribution to identify the causal effects of wage rigidities after an unexpected 1% decline of the price level caused by the unexpected removal of an exchange rate floor policy. Locally, that is near the origin of the wage growth distribution, downward nominal wage rigidities cause a 4.5% decline of income and a 0.7 percentage point increase of the unemployment rate. We then construct sampling weights using the social security register data to estimate representative aggregate statistics. In the aggregate, income declines by 0.3% and the number of unemployed persons increases by 1.2%. Show more
Publication status
publishedExternal links
Publisher
European Central BankEvent
Subject
Downward nominal wage rigidity; Income; Employment; Unemployment; DeflationOrganisational unit
06331 - KOF FB Konjunkturumfragen / KOF Business Tendency Surveys
02525 - KOF Konjunkturforschungsstelle / KOF Swiss Economic Institute
Notes
Conference lecture held on October 7, 2021.More
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ETH Bibliography
yes
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