Nominal Wage Rigidity in Contract Data: A Parametric Approach

40 Pages Posted: 13 May 2003

See all articles by Louis N. Christofides

Louis N. Christofides

University of Cyprus - Department of Economics; University of Guelph; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); IZA Institute of Labor Economics

Man Tuen Leung

Cisco Systems - Hong Kong

Multiple version iconThere are 3 versions of this paper

Date Written: July 11, 2002

Abstract

Using wage agreements reached in the Canadian unionized sector during 1976-99, a period of high as well as exceptionally low inflation, we consider how histograms of wage adjustment change as inflation reaches the low levels of the 1990s. The histograms and parametric tests suggest that wage adjustment is characterized by downward nominal rigidity and significant spikes at zero. There is some evidence of modest menu-cost effects. We examine whether the rigidity features of wage adjustment are sensitive to indexation provisions and investigate whether the distinction between short and long contracts is useful.

Keywords: Low wage inflation, nominal rigidity, menu-costs

JEL Classification: E31

Suggested Citation

Christofides, Louis N. and Leung, Man Tuen, Nominal Wage Rigidity in Contract Data: A Parametric Approach (July 11, 2002). Available at SSRN: https://ssrn.com/abstract=382261 or http://dx.doi.org/10.2139/ssrn.382261

Louis N. Christofides (Contact Author)

University of Cyprus - Department of Economics ( email )

75 Kallipoleos Street
P.O. Box 20537
1678 Nicosia
Cyprus
357 22 892448 (Phone)
357 22 892432 (Fax)

University of Guelph ( email )

Guelph, Ontario
Canada
001-519-763-8497 (Phone)

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Man Tuen Leung

Cisco Systems - Hong Kong ( email )

Hong Kong
Hong Kong

Register to save articles to
your library

Register

Paper statistics

Downloads
40
Abstract Views
615
PlumX Metrics