Download or read book What Does Downward Nominal wage Rigidity Imply for Monetary Policy written by Bank of Canada and published by . This book was released on 1997 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Downward Nominal Wage Rigidity written by and published by . This book was released on 2000 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: Labour market observers have long suspected that employers are unwilling to reduce the nominal wages paid to their workers even when they experience severe financial difficulties. This notion of downward nominal wage rigidity (DNWR) has played a prominent role in many models of the labour market and the economy. The first part of this paper reviews the literature on the extent & consequences of DNWR and presents the evidence for DNWR as an important labour market phenomenon. The second part examines the effect of DNWR on wage & employment determination in Canada during periods of low inflation. Data for this examination come from a new wage series based on individual data files from Statistics Canada's Survey of Consumer Finance for 1981 to 1997. This series is used to analyze the relationship between real wage changes and economic conditions. The implication that the real wage should decline less in periods of lower inflation is tested by estimating real wage Phillips curves that link the unemployment rate to the change in real wages. Several empirical strategies are employed to test the hypothesis that the Phillips curve became flatter when inflation dropped below 2% in the 1990s. A second empirical strategy relies on variation both across time & provinces in economic conditions to identify potential changes in the relationship between unemployment rates and changes in real wages. Finally, the paper exploits the richness of the Survey of Consumer Finance data to better understand the cyclical behaviour of real wages in Canada from 1981 to 1997.

Download or read book Downward Nominal Wage Rigidity written by Bank of Canada and published by . This book was released on 2001 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Employment Costs of Downward Nominal wage Rigidity written by Jean Farès and published by . This book was released on 2000 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: Uses firm-level wage and employment data to address whether there is evidence of downward nominal-wage rigidity, and whether that rigidity is associated with a reduction in employment.

Download or read book Downward Nominal Wage Rigidity in Canada written by Joel Wagner and published by . This book was released on 2017 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Is There Downward Nominal Wage Rigidity in the Canadian Phillips Curve written by Alan Stark and published by . This book was released on 2003 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Downward Nominal Wage Rigidity in Canada written by Dany Brouillette and published by . This book was released on 2016 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: "We assess the importance of downward nominal wage rigidity (DNWR) in Canada using both firm- and worker-level microdata. In particular, we analyze employer-level administrative data from the Major Wage Settlements (MWS) and household-basedsurvey data from the Survey of Labour Income Dynamics (SLID). MWS data cover large unionized firms in Canada, while SLID is a rich rotating panel representative of the employed population in Canada. Combining both sources of information allows for amore extensive analysis of DNWR in the Canadian labour market. The results suggest that, on average, the effects of DNWR added about 0.2 to 0.4 percentage points to wage growth between 1994 and 2011; as well, the estimated effects increased in the years following the Great Recession in 2008-09. That includes a higher proportion of workers affected by DNWR (which rose from 16 to 32 per cent) and a larger impact on average wage growth. DNWR's effects on average wage growth were also much stronger during periods of lower CPI inflation in Canada and are positively related to provincial unemployment rates. Finally, we provide an extensive analysis of the heterogeneity in the effects of DNWR. For example, its impact is more pronounced among smaller firms, lower occupational levels, immigrants and older workers. Overall, population ageing andan increasing proportion of immigrants may continue to increase the effects of DNWR in Canada, while the continuing shift toward service industries, declining unionization rates and the increasing educational attainment of the Canadian population may reduce them"-abstract.

Download or read book Downward Nominal Wage Rigidity Meets the Zero Lower Bound written by Robert A. Amano and published by . This book was released on 2017 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: "We add downward nominal wage rigidity to a standard New Keynesian model with stickyprices and wages, where the zero lower bound on nominal interest rates is allowed to bind. We find that wage rigidity not only reduces the frequency of zero bound episodes but also mitigates the severity of corresponding recessions. As a result, previous studies abstracting from the presence of wage rigidity may have overemphasized the need for increasing the inflation target to offset the costs associated with hitting the zero bound. Moreover, our findings add to the recent debate on the presumed benefits of wage flexibility that has arisen in the aftermath of the Great Recession"--Abstract, p. ii.

Download or read book Downward Nominal Wage Rigidity Inflation and Unemployment written by Dany Brouillette and published by . This book was released on 2017 with total page 13 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Recent evidence suggests that the extent of downward nominal wage rigidity (DNWR) inthe Canadian labour market has risen following the 2008-09 recession. This note studies whether DNWR can lead to a long‐run trade‐off between inflation and unemployment, especially at lower rates of inflation-a question that has important implications for the optimal level of inflation in the long run. The results suggest that the trade‐off between unemployment and inflation remains weak despite the estimated increase in DNWR. In particular, the long‐run Phillips curve is close to vertical at inflation rates of 2 per cent or more, in line with earlier findings. As a result, an increase in long‐term inflation from 2 to 3 per cent would lower unemployment by about 0.1-0.2 percentage points. Overall, our results suggest that the benefits of raising the inflation target to attain a lower long‐term unemployment level seem rather weak"--Abstract, p. iii.

Download or read book Downward Nominal Wage Ridigity in Canada written by Joel Wagner and published by . This book was released on 2017 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: "The existence of downward nominal wage rigidity (DNWR) has often been used to justify a positive inflation target. It is traditionally assumed that positive inflation could "grease the wheels" of the labour market by putting downward pressure on real wages, easing labour market adjustments during a recession. A rise in the inflation target would attenuate the long-run level of unemployment and hasten economic recovery after an adverse shock. Following Daly and Hobijn (2014), we re-examine these issues in a model that accounts for precautionary motives in wage-setting behaviour. We confirm that DNWR generates a long-run negative relation between inflation and unemployment, in line with previous contributions to the literature. However, we also find that the increase in the number of people bound by DNWR following a negative demand shock rises with inflation, offsetting the beneficial effects of a higher inflation target. As an implication, contrary to previous contributions that neglected precautionary behaviour, the speed at which unemployment returns to pre-crisis levels during recessions is relatively unaffected by variations in the inflation target."--Abstract, p. ii.

Download or read book Downward Nominal Wage Rigidity written by Patrick J. Coe and published by . This book was released on 2018 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: French Abstract: Rigidité des salaires nominaux à la baisse : résultats pour le Canada 1901-1950. Ce mémoire teste la présence de la rigidité des salaires nominaux à la baisse à l'aide de données canadiennes pour 26 occupations dans 38 villes dans la première moitié du 20e siècle. L'échantillon est d'un intérêt particulier parce qu'il contient des périodes où les taux moyens d'inflation sont près de zéro mais aussi deux périodes de déflation abruptes. Les résultats d'une variété de tests indiquent que les distributions de changements de salaires sont compatibles avec la présence de rigidité des salaires nominaux à la baisse. Cependant, pour deux sous-échantillons contenant des déclins abrupts dans le niveau de production et des prix, les estimations de l'importance de la rigidité des salaires nominaux à la baisse sont beaucoup plus faible. Cela suggère que les ajustements à la baisse se sont produits durant des moments de dépression sévère et de déflation.

Download or read book Downward Nominal Wage Rigidity in Canada written by Joel Wagner and published by . This book was released on 2018 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: French Abstract: Rigidité à la baisse des salaires nominaux au Canada: résultats remettant en question l'effet de lubrification. L'existence de la rigidité à la baisse des salaires nominaux (RBSN) a souvent été utilisée pour justifier une cible d'inflation positive. Traditionnellement on présume qu'une inflation positive peut “lubrifier les rouages” du marché du travail en mettant une pression à la baisse sur les salaires réels, facilitant ainsi les ajustements dans le marché du travail au cours d'une récession. Un accroissement dans la cible d'inflation atténuerait l'effet à long terme sur le niveau de chômage et pourrait accélérer la reprise après un choc adverse. À la suite de Daly et Hobijn (2014), l'auteur réexamine ces questions dans un modèle qui tient compte du motif de précaution dans le comportement de détermination des salaires. On confirme que la RBSN génère une relation négative à long terme entre inflation et chômage, résultat déjà inscrit dans la littérature spécialisée. Cependant on découvre aussi que le nombre de personnes frappées par la RBSN à la suite d'un choc négatif dans la demande augmente à proportion que la cible d'inflation augmente, compensant les effets bénéfiques d'une cible d'inflation accrue sur l'écart de chômage. Voilà qui implique que, contrairement à ce qui est rapporté dans une littérature qui négligeait le comportement de précaution, la vitesse avec laquelle le chômage retourne à son niveau de l'avant-crise est relativement non-affectée par les variations dans la cible d'inflation.

Download or read book Is There Downward Nominal Wage Rigidity in the Canadian Phillips Curve written by Alan Stark and published by . This book was released on 2003 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Employment Effects of Nominal wage Rigidity written by Umar Ahmed Faruqui and published by . This book was released on 2000 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Evaluating the Economic Significance of Downward Nominal Wage Rigidity written by Michael W. L. Elsby and published by . This book was released on 2006 with total page 72 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper formalizes and assesses empirically the implications of widely observed evidence for downward nominal wage rigidity (DNWR). It shows how a model of DNWR informed by diverse evidence for worker resistance to nominal wage cuts is nevertheless consistent with weak macroeconomic effects. This occurs because firms have an incentive to compress wage increases as well as wage cuts when DNWR binds. By neglecting potential compression of wage increases, the previous literature may have overstated the costs of DNWR to firms. Using a broad range of micro--data from the US and Great Britain I find that firms do indeed compress wage increases as well as wage cuts at times when DNWR binds. Accounting for this reduces the estimated increase in aggregate wage growth due to DNWR to be much closer to zero, consistent with the predictions of the model. These results suggest that DNWR may not provide a strong argument against the targeting of low inflation rates, as practiced by many monetary authorities. Importantly, though, this result is nevertheless consistent with evidence that suggests workers are averse to nominal wage cuts.

Download or read book How Rigid are Nominal wage Rates written by Allan Crawford and published by . This book was released on 2001 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the effect of nominal-wage rigidities on wage growth in Canada using a hazard model and micro data for union contracts. The hazard model is specified in a way that allows considerable flexibility in the shape of the estimated notional wage-change distribution. This notional distribution is compared with the observed distribution to estimate the net effect of downward nominal-wage rigidity and menu costs on wage growth. Estimates from alternative versions of the model suggest that the net effect on the average annual growth rate of wages was in the range of 0.10 to 0.18 percentage points in the unionized private sector during the low-inflation period of the 1990s.

Download or read book The Extent and Consequences of Downward Nominal Wage Rigidity written by Joseph G. Altonji and published by . This book was released on 1999 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using the Panel Study of Income Dynamics, we find that true wage changes have many fewer nominal cuts and more nominal freezes than reported nominal wage changes. The data overwhelmingly rejects a model of flexible wage changes and provides some evidence against a model of perfect downward rigidity in favor of a more general model. The more general model incorporates downward rigidity but specifies that nominal wage cuts may occur when large cuts would occur in the absence of wage rigidity. However, the results of the general model imply that nominal wage cuts are rare. We also analyze the personnel files of a large corporation and find cuts in base pay are rare and almost always associated with changes in full time status or a switch between compensation schemes involving incentives. Our evidence on the consequences of nominal wage rigidity is mixed. We find modest support for the hypothesis that workers who are overpaid because of nominal wage rigidity are less likely to quit.