Wage-Setting Behavior in France: Additional Evidence from an Ad-Hoc Survey

51 Pages Posted: 30 Oct 2009

Multiple version iconThere are 2 versions of this paper

Date Written: October 29, 2009

Abstract

We investigate the wage-setting behavior of French companies using an ad-hoc survey conducted specifically for this study. Our main results are the following. i) Wages are changed infrequently. The mean duration of wage contracts is one year. Wage changes occur at regular intervals during the year and are concentrated in January and July. ii) We find a lower degree of downward real wage rigidity and nominal wage rigidity in France compared to the European average. iii) About one third of companies have an internal policy to grant wage increases according to inflation. iv) When companies are faced adverse shocks, only a partial response is transmitted into prices. Companies also adopt cost-cutting strategies. The wage of newly hired employees plays an important role in this adjustment.

Keywords: wage rigidity, wage-setting behavior, survey data

JEL Classification: E3, D4, L11

Suggested Citation

Montornes, Jeremi and Sauner Leroy, Jacques Bernard, Wage-Setting Behavior in France: Additional Evidence from an Ad-Hoc Survey (October 29, 2009). ECB Working Paper No. 1102, Available at SSRN: https://ssrn.com/abstract=1485325 or http://dx.doi.org/10.2139/ssrn.1485325

Jeremi Montornes (Contact Author)

Banque de France ( email )

DGEI 41-1430
75049 Paris Cedex 01
Paris, 75049
France

Jacques Bernard Sauner Leroy

Banque de France ( email )

Paris
France

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