It is sometimes argued that resistance to nominal wage cuts would justify a moderate amount of inflation in order to “grease the wheels of the labour market”. While empirical studies tend to find that nominal wages are not downwardly rigid in Anglo-Saxon economies, a number of studies suggest that downward nominal wage rigidity is more widespread among continental European countries. This paper...

Discussion Papers are intended to make results of ZEW research promptly available to other economists in order to encourage discussion and suggestions for revisions. The authors are solely responsible for the contents which do not necessarily represent the opinion of the ZEW. This study joins the literature which investigates the empirical relevance of prominent explanations for wage rigidity, ...

Unit labor cost (ULC) is defined as labor compensation per value added. It captures the cost competitiveness of industries and countries. As labor compensation is wage multiplied by hours worked or number of people employed, it is easy to show that ULC is wage divided by labor productivity. Thus, changes in ULC are often discussed in the context of wage increases and labor productivity. However...

The Effect of the Minimum Wage on Prices in Brazil There is very little empirical evidence on the effects of the minimum wage on prices in the international literature and none whatsoever for developing countries. This paper estimates the minimum wage price effect using monthly Brazilian household and firm data from 1982 to 2000 aggregated at a regional level. Empirical evidence on price effect...

This paper examines the role of persistent effects of past labor market conditions in explaining trends in the college-high school wage gap in the US. I document increases in the wage gap for older workers since the late 1990s, which are larger than those predicted by standard explanations and are consistent with an important role for persistence in the wage gap. Using a semi-parametric estimat...

This paper develops and estimates a spatial general equilibrium job search model to study the effects of local and federal minimum wage policies. In the model, firms post vacancies in multiple locations. Workers, who are heterogeneous in terms of location and educational types, engage in random search and can migrate or commute in response to job offers. I estimate the model by combining multip...

COMPETING EXPLANATIONS OF MALE INTERRACIAL WAGE DIFFERENTIALS: MISSING VARIABLE MODELS VERSUS JOB COMPETITION Persistent interracial wage differentials present a challenge for neoclassical models of discrimination, which claim that long run competition is not consistent with persistent discrimination. Accordingly, several missing variable explanations are proposed in the literature. These modif...

This paper identifies some of the determinants of individual mobility in the wage distribution over time. The proposed model takes attrition as well as the decile of origin into account unlike all other used models to describe the wage mobility. A simpel probit analysis is compared with the more sofisticated method used in this paper. Even though the wage distribution in Denmark has been nearly...