The Costs of Price Stability

Downward Nominal Wage Rigidity in Europe

Datos Bibliográficos

ID9728286
AutoresSteinar Holden (0000-0001-7378-8191, Swedish National Bank, autor de correspondencia)
Año2004
Volumen71
Número282
Páginas183-208
Fecha de publicación2004-05-01
Peer ReviewedSí
Open AccessSí
TipoARTICLE
RevistaEconomica (JOURNAL)
Identificadores de la revistaISSN: 0013-0427 • E-ISSN: 1468-0335
EditorialWiley (PUBLISHER • GB)
DOI10.1111/j.0013-0427.2004.00365.x
OpenAlexW2143853931
IdiomaEN
Citas recibidas2
Referencias citadas27

In most European countries, the prevailing terms of employment, including the nominal wage, can be changed only by mutual consent. This legal feature gives workers a strategic advantage in wage negotiations when employers push for a nominal wage cut. The upshot is a long‐run trade‐off between inflation and unemployment for low levels of inflation, in spite of all agents being rational and with no expectational errors. Specifically, downward nominal wage rigidity and excess unemployment at zero inflation are related to three factors: the coverage of collective agreements, the legal framework at contract renewal, and the strictness of the employment protection legislation for non‐union workers

Economics · Inflation (cosmology) · Labour economics · Macroeconomics · Monetary economics · Monetary policy · Negotiation · Price of stability · Rigidity (electromagnetism) · Unemployment · Wage · Economic Policies and Impacts · Economic theories and models · Monetary Policy and Economic Impact