The Price is Right? Pay Settlements and Nominal Wage Rigidity in Britain

19 Pages Posted: 4 Aug 2004

See all articles by Donna Brown

Donna Brown

University of London, Royal Holloway College - Department of Economics

Peter Ingram

University of Surrey

Jonathan Wadsworth

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP); IZA Institute of Labor Economics; William Davidson Institute; Royal Holloway College University of London

Abstract

We examine representative, group-level wage settlement data to augment the debate on nominal pay rigidity in Britain. We investigate the characteristics of groups that settle at zero and the role of within-firm and external influences. Nominal settlement cuts are rare. Zero nominal wage settlements are more common, but still relatively unusual, highest during (low-inflation) recessionary periods. Small groups, above all firms under duress, appear most likely to settle at zero. Once a group settles at zero it is unlikely to do so again in the short run.

Suggested Citation

Brown, Donna and Ingram, Peter and Wadsworth, Jonathan, The Price is Right? Pay Settlements and Nominal Wage Rigidity in Britain. Available at SSRN: https://ssrn.com/abstract=568175

Donna Brown (Contact Author)

University of London, Royal Holloway College - Department of Economics ( email )

Royal Holloway College
Egham
Surrey, Surrey TW20 0EX
United Kingdom

Peter Ingram

University of Surrey ( email )

Guildford
Guildford, Surrey GU2 5XH
United Kingdom

Jonathan Wadsworth

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
England

IZA Institute of Labor Economics

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

William Davidson Institute

724 E. University Ave.
Wyly Hall
Ann Arbor, MI 48109-1234
United States

Royal Holloway College University of London

Senate House
Malet Street
London, TW20 0EX
United Kingdom

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