Wage Rigidity, Collective Bargaining and the Minimum Wage: Evidence from French Agreement Data

Abstract

We highlight different stylized facts concerning wage stickiness. First, in France, the typical duration of a wage agreement is one year. Consequently, a Taylor-type (1980) model appears to reproduce appropriately the distribution of agreement durations. Some 30 percent of settlements stipulate several predetermined wage changes during the year following the date of signature of the agreement. The frequency of wage agreements is highly seasonal, but the dates at which agreements take effect are more staggered. The date at which the national minimum wage level is revised each year has a significant impact on the timetable of wage agreements, both at the firm- and industry-levels. Wage increases negotiated at these two levels mainly depend on the inflation regime, the firm profitability and the proportion of minimum-wage workers in the same industry.

Keywords: Wage Stickiness, Wage Bargaining, Minimum Wage, Downward Nominal Wage Rigidity

JEL Classification: J31, J50, E30