Price, Wage and Employment Response to Shocks: Evidence from the WDN Survey

36 Pages Posted: 11 Apr 2010

See all articles by Giuseppe Bertola

Giuseppe Bertola

Centre for Economic Policy Research (CEPR); Università di Torino - Dip. di Economia e Statistica

Aurelijus Dabusinskas

Bank of Estonia

Marco Hoeberichts

De Nederlandsche Bank - Research Department

Mario Izquierdo

Banco de España

Claudia Kwapil

Oesterreichische Nationalbank

Jeremi Montornes

Banque de France

Daniel Radowski

Deutsche Bundesbank

Multiple version iconThere are 4 versions of this paper

Date Written: April 9, 2010

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 — in theoretically sensible ways — on the intensity of competition in firms’ product markets, on the importance of collective wage bargaining and on other structural and institutional features of firms and of their environment. Focusing on the pass-through of cost shocks to prices, our results suggest that the pass-through is lower in highly competitive firms. Furthermore, a high degree of employment protection and collective wage agreements tend to make this pass through stronger.

Keywords: Wage bargaining, Labour-market institutions, Survey data, European Union

JEL Classification: J31, J38, P5

Suggested Citation

Bertola, Giuseppe and Dabusinskas, Aurelijus and Hoeberichts, Marco M. and Izquierdo, Mario and Kwapil, Claudia and Montornes, Jeremi and Radowski, Daniel, Price, Wage and Employment Response to Shocks: Evidence from the WDN Survey (April 9, 2010). Banco de Espana Working Paper No. 1006. Available at SSRN: https://ssrn.com/abstract=1586827 or http://dx.doi.org/10.2139/ssrn.1586827

Giuseppe Bertola

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Università di Torino - Dip. di Economia e Statistica ( email )

Lungo Dora Siena 100
Torino, 10153
Italy
+39 011 670 4405 (Phone)

HOME PAGE: http://https://sites.google.com/site/gipbert

Aurelijus Dabusinskas

Bank of Estonia ( email )

Estonia Building 13
15095 Tallinn
Estonia

Marco M. Hoeberichts

De Nederlandsche Bank - Research Department ( email )

P.O. Box 98
1000 AB Amsterdam
Netherlands
+31-20-524 2890 (Phone)
+31-20-524 2529 (Fax)

Mario Izquierdo (Contact Author)

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Claudia Kwapil

Oesterreichische Nationalbank ( email )

Otto-Wagner Platz 3
POB 61
Vienna 1011
Austria

Jeremi Montornes

Banque de France ( email )

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

Daniel Radowski

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

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