Wage Floor Rigidity in Industry-Level Agreements: Evidence from France

58 Pages Posted: 24 Sep 2018

See all articles by Denis Fougère

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

Sébastien Roux

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

Abstract

This paper examines empirically the dynamics of wage floors defined in industry-level wage agreements in France. It also investigates how industry-level wage floor adjustment interacts with changes in the national minimum wage (NMW hereafter). For this, we have collected a unique dataset of approximately 3,200 industry-level wage agreements containing about 70,000 occupation-specific wage floors in 367 industries over the period 2006Q1-2017Q4. Our main results are the following.Wage floors are quite rigid, adjusting only once a year on average. They mostly adjust in the first quarter of the year and the NMW shapes the timing of industry-level wage bargaining. Inflation but also changes in past aggregate wage increases and in the real NMW are the main drivers of wage floor adjustments. Elasticities of wage floors with respect to these macro variables are 0.6, 0.4 and 0.3 respectively. Inflation and the NMW have both decreasing but positive effects all along the wage floor distribution.

Keywords: collective bargaining, wages, minimum wage, inflation

JEL Classification: J31, J51, E24

Suggested Citation

Fougere, Denis and Fougere, Denis and Gautier, Erwan and Roux, Sébastien, Wage Floor Rigidity in Industry-Level Agreements: Evidence from France. IZA Discussion Paper No. 11828, Available at SSRN: https://ssrn.com/abstract=3253486 or http://dx.doi.org/10.2139/ssrn.3253486

Denis Fougere (Contact Author)

National Center for Scientific Research (CNRS)

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IZA Institute of Labor Economics

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Centre for Economic Policy Research (CEPR) ( email )

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Erwan Gautier

Banque de France - Centre de Recherche ( email )

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75049 Paris Cedex 01
France

Sébastien Roux

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) ( email )

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Malakoff Cedex, 1 92245
France

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