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Do Sticky Wages Matter? New Evidence from Matched Firm Survey and Register Data
Auteur(s)
Anne Kathrin Funk
Date de parution
2022
In
Economica
Vol.
89
No
355
De la page
689
A la page
712
Résumé
We study the causal effects of downward nominal wage rigidity after a deflationary monetary policy shock using Swiss data on employee‐level contractual wages matched with income and employment from social security register data. We exploit the discontinuity around the origin of the wage growth distribution to compare the outcomes of individuals with wage freezes (treatment group) and small wage cuts (control group) before and after an unexpected decision by the Swiss National Bank leading to a 1% decline of the price level. Locally (that is, near the origin of the wage growth distribution), downward nominal wage rigidities cause a 4.4% decline in income and a 0.7 percentage point increase in the probability of unemployment. In the aggregate, income declines by 0.3% and the probability of unemployment increases by 0.05 percentage points.
Identifiants
Type de publication
journal article
