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

34 Pages Posted: 11 Jul 2011

See all articles by Sanvi Avouyi-Dovi

Sanvi Avouyi-Dovi

Banque de France; ICN Business School

Denis Fougère

National Center for Scientific Research (CNRS); CNRS and SCIENCES PO PARIS; IZA Institute of Labor Economics; Centre for Economic Policy Research (CEPR)

Erwan Gautier

Banque de France - Centre de Recherche

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Abstract

Using several unique data sets on wage agreements at both industry and firm levels in France, we document stylized facts on wage stickiness and the impact of wage-setting institutions on wage rigidity. First, the average duration of wages is a little less than one year and around 10 percent of wages are modified each month by a wage agreement. Data patterns are consistent with predictions of a mixture of Calvo and Taylor models. The frequency of wage change agreements is rather staggered over the year but the frequency of effective wage changes is seasonal. The national minimum wage has a significant impact on the probability of a wage agreement and on the seasonality of wage changes. Negotiated wage increases are correlated with inflation, the national minimum wage increases and the firm profitability.

Keywords: wage stickiness, wage bargaining, minimum wage, downward nominal wage rigidity

JEL Classification: J31, J50, E30

Suggested Citation

Avouyi-Dovi, Sanvi and Fougere, Denis and Fougere, Denis and Gautier, Erwan, Wage Rigidity, Collective Bargaining and the Minimum Wage: Evidence from French Agreement Data. IZA Discussion Paper No. 5835, Available at SSRN: https://ssrn.com/abstract=1882854

Sanvi Avouyi-Dovi (Contact Author)

Banque de France ( email )

Paris
France

ICN Business School ( email )

13 rue du Marechal Ney
Nancy, 54000
France

Denis Fougere

National Center for Scientific Research (CNRS)

3, rue Michel-Ange
Paris cedex 16, 75794
France

CNRS and SCIENCES PO PARIS ( email )

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HOME PAGE: http://https://www.sciencespo.fr/osc/fr/node/1609.html

IZA Institute of Labor Economics

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Germany

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Erwan Gautier

Banque de France - Centre de Recherche ( email )

31 rue Croix des Petits Champs
75049 Paris Cedex 01
France

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