On Sand and the Role of Grease in Labor Markets
How Does Germany Compare?

Decressin, Anja; Decressin, Jörg

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On Sand and the Role of Grease in Labor Markets How Does Germany Compare?

IMF Working Paper No. 02/164

37 Pages Posted: 2 Feb 2006

See all articles by Anja Decressin

Jörg Decressin

International Monetary Fund (IMF)

Date Written: September 2002

Abstract

This paper investigates wage setting in (west) Germany using the German Socioeconomic Panel dataset on individuals and compares the findings with those available for the United Kingdom and the United States. The fraction of job stayers in (west) Germany who suffer unchanged wages or wage cuts compares with that in similar data for the Anglo-American countries, even after various adjustments for potential reporting errors. While nominal wages of job stayers are rigid downward, real wages are not. Nevertheless, the macroeconomic effects of the nominal rigidity are limited and cannot be weakened substantially by raising inflation.

Keywords: Wage Setting Wage Rigidities Inflation Targets

JEL Classification: E24 E31 E52 J30

Suggested Citation: Suggested Citation

Decressin, Anja and Decressin, Jorg W., On Sand and the Role of Grease in Labor Markets How Does Germany Compare? (September 2002). IMF Working Paper No. 02/164, Available at SSRN: https://ssrn.com/abstract=880187