Rigid Wages and Flexible Contracts

54 Pages Posted: 16 Jan 2024

See all articles by Burak Uras

Burak Uras

Tilburg University - Center for Economic Research (CentER); Tilburg University - Department of Economics

Nate Vellekoop

Williams College - Department of Economics; University of Toronto

Anderson Grajales-Olarte

Tilburg University - Center for Economic Research (CentER)

Abstract

We study the relationship between contractual flexibility and nominal wage rigidity using administrative data from the Netherlands. Our empirical analysis reveals that contracts featuring flexible-hours exhibit a higher probability of a wage change compared to fixed-hour contracts. Once we split the sample based on contract characteristics, we also find that the response of wage changes to the time and state component is heterogeneous across different type of contracts - with relatively more downward adjustments in flexible-hour contract wages in response to aggregate unemployment. These results point to the importance of contract features in general and flexibility in hours in particular for the variability of wages.

Keywords: Time & state dependency of wages, microdata, flexible-hour contracts.

Suggested Citation

Uras, Burak R. and Vellekoop, Nathanael and Grajales-Olarte, Anderson, Rigid Wages and Flexible Contracts. Available at SSRN: https://ssrn.com/abstract=4696324 or http://dx.doi.org/10.2139/ssrn.4696324

Burak R. Uras (Contact Author)

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Tilburg University - Department of Economics ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Nathanael Vellekoop

Williams College - Department of Economics ( email )

Schapiro Hall
24 Hopkins Drive
Williamstown, MA 01267
United States

University of Toronto ( email )

Max Gluskin House
150 St George st
Toronto, Ontario M5S 3G7
Canada

HOME PAGE: http://www.nvellekoop.nl

Anderson Grajales-Olarte

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

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