Business Cycles and Wage Rigidity

Cristian Bartolucci

No 205, Carlo Alberto Notebooks from Collegio Carlo Alberto

Abstract: This paper analyzes the impact of downward wage rigidity on the labor market. It shows that imposing downward wage rigidity in a matching model with cyclical fluctuations in productivity, endogenous match-destruction, and on-the-job search, quits are procyclical and layoffs countercyclical. It provides evidence that downward wage rigidity is empirically relevant in ten European countries. It finally shows that layoffs are countercyclical and quits are procyclical, as predicted by the model.

Keywords: Downward wage rigidity; Business cycles; Wage renegotiation (search for similar items in EconPapers)
JEL-codes: E3 J41 J63 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2011
New Economics Papers: this item is included in nep-dge and nep-lab
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Journal Article: Business cycles and wage rigidity (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:cca:wpaper:205

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