Reasons for Wage Rigidity in Germany
By W. Franz, Friedhelm Pfeiffer. Social Science Research Network, 2006
131 citations recorded by the source corpus.
This study investigates institutional and economic reasons for downward wage rigidity regarding three occupational skill groups. Based on a survey of 801 firms in Germany and an econometric analysis, we find strong support for explanations based on the effects of labour union contracts and efficiency wages that differ between skill groups. Survey respondents indicate that labour union contracts and implicit contracts are important reasons for wage rigidity for the (less) skilled. Specific human capital and negative signals for new hires are causes of the stickiness of wages for the highly skilled. Compared with US evidence, German firms seem to attach more importance to labour union contracts and specific human capital.
Subfields: Economics and Econometrics, Public Administration
View Paper: https://www.semanticscholar.org/paper/db5fa4b00e55ef591fac42162514b726c017bc89
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Citations in the corpus
- Rising Wage Inequality in Germany (2007, result): “Wages therefore seem to react more flexible for entrants and workers with low tenure compared to incumbent workers, which is line with the literature on empirical determinants of wage rigidity in Germany, see Franz and Pfeiffer (2006), among others.”
- Downward Nominal and Real Wage Rigidity: Survey Evidence from European Firms (2009, unknown): “It is also consistent with the findings by Franz and Pfeiffer (2006), who examine the determinants of wage rigidity in Germany.”