Asymmetries and Rigidities in Wage Adjustments by Firms

41 Pages Posted: 29 Dec 2006

See all articles by Harry J. Holzer

Harry J. Holzer

Georgetown University - Public Policy Institute (GPPI); National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Edward B. Montgomery

University of Maryland; National Bureau of Economic Research (NBER)

Date Written: March 1990

Abstract

In this paper we use micro data from the Employment Opportunity Pilot Project (EOPP) surveys of firms in 1980 and 1982 to test for labor market rigidities and asymmetries in response to demand shifts. We analyze wage and employment adjustments to positive and negative shifts, as measured by sales growth between 1979 and 1981. The analysis is done for both entire sample of firms and for selected subsamples based on firm size, unionization, industry and skill mix. The results show that wage adjustments appear to be fairly rigid, compared with employment adjustments. They also appear to be quite asymmetric, with significant adjustments in response to positive shifts but little adjustment in response to negative shifts. These asymmetries are not more pronounced in large firms, manufacturing, heavily-waged or highly-skilled industries than in other firms or industries. In contrast, employment adjustments show no consistent pattern of asymmetry.

Suggested Citation

Holzer, Harry J. and Montgomery, Edward B., Asymmetries and Rigidities in Wage Adjustments by Firms (March 1990). NBER Working Paper No. w3274. Available at SSRN: https://ssrn.com/abstract=468391

Harry J. Holzer (Contact Author)

Georgetown University - Public Policy Institute (GPPI) ( email )

3600 N Street, NW Suite 200
Washington, DC 20057
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

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

Edward B. Montgomery

University of Maryland ( email )

Department of Economics
College Park, MD 20742
United States
301-405-3498 (Phone)
301-405-3542 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
22
Abstract Views
504
PlumX Metrics