Link to the University of Pittsburgh
Link to the University Library SystemContact us link
AEI Banner

Wages, labor or prices: How do firms react to shocks? National Bank of Belgium Working Paper, No. 193, July 2010

Dhyne, Emmanuel and Druant, Martine. (2010) Wages, labor or prices: How do firms react to shocks? National Bank of Belgium Working Paper, No. 193, July 2010. [Working Paper]

[img] PDF
Download (585Kb)

    Abstract

    Survey results in 15 European countries for almost 15,000 firms reveal that Belgian firms react more than the average European firm to adverse shocks by reducing permanent and temporary employment. On the basis of a firm-level analysis, this paper confirms that the different reaction to shocks is significant and investigates what factors explain this difference. Although the explanatory value of the variables is limited, most of the explanatory power of the model being associated with the dummy variables coding for firm size, sector and country, the variables investigated provide valuable information. The importance of wage bargaining above the firm level, the automatic system of index-linking wages to past inflation, the limited use of flexible pay, the high share of low-skilled blue-collar workers, the labor intensive production process as well as the less stringent legislation with respect to the protection against dismissal are at the basis of the stronger employment reaction of Belgian firms. On the contrary, employment is safeguarded by the presence of many small firms and a wage cushion.

    Export/Citation:EndNote | BibTeX | Dublin Core | ASCII (Chicago style) | HTML Citation | OpenURL
    Social Networking:
    Item Type: Working Paper
    Uncontrolled Keywords: Survey; wage rigidity; cost-push shocks; demand shock; wage bargaining institutions; indexation.
    Subjects for non-EU documents: Countries > Belgium
    EU policies and themes > Policies & related activities > employment/labour market > labour/labor
    EU policies and themes > Policies & related activities > employment/labour market > employment/unemployment
    EU policies and themes > Policies & related activities > employment/labour market > industrial/labour relations
    EU policies and themes > Policies & related activities > economic and financial affairs > business/private economic activity
    Subjects for EU documents: UNSPECIFIED
    EU Series: UNSPECIFIED
    ["eprint_fieldname_eusries" not defined]: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > National Bank of Belgium (Brussels) > Working Papers
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 02 Aug 2010
    Page Range: p. 45
    Last Modified: 15 Feb 2011 18:33
    URI: http://aei.pitt.edu/id/eprint/14456

    Actions (login required)

    View Item

    Document Downloads