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Why Firms Avoid Cutting Wages : Survey Evidence from European Firms

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dc.contributor.authorDu Caju, Philip
dc.contributor.authorKosma, Theodora
dc.contributor.authorLawless, Martina
dc.contributor.authorMessina, Julian
dc.contributor.authorRoom, Tairi
dc.date.accessioned2014-08-15T14:40:59Z
dc.date.available2014-08-15T14:40:59Z
dc.date.issued2014-07
dc.description.abstractFirms very rarely cut nominal wages, even in the face of considerable negative economic shocks. This paper uses a unique survey of fourteen European countries to ask firms directly about the incidence of wage cuts and to assess the relevance of a range of potential reasons for why the firms avoid cutting wages. The paper examines how firm characteristics and collective bargaining institutions affect the relevance of each of the common explanations put forward for the infrequency of wage cuts. Concerns about the retention of productive staff and a lowering of morale and effort were reported as key reasons for downward wage rigidity across all countries and firm types. Restrictions created by collective bargaining were found to be an important consideration for firms in Western European (EU-15) countries but were one of the lowest ranked obstacles in the new EU member states in Central and Eastern Europe.en
dc.identifierhttp://documents.worldbank.org/curated/en/2014/07/19878434/firms-avoid-cutting-wages-survey-evidence-european-firms
dc.identifier.doi10.1596/1813-9450-6976
dc.identifier.urihttps://hdl.handle.net/10986/19349
dc.languageEnglish
dc.language.isoen_US
dc.publisherWorld Bank Group, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;No. 6976
dc.rightsCC BY 3.0 IGO
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectADVERSE SELECTION
dc.subjectAVERAGE WAGE
dc.subjectBARGAINING INSTITUTIONS
dc.subjectBARGAINING POWER
dc.subjectBARGAINING SYSTEM
dc.subjectBUSINESS CYCLE
dc.subjectCLERKS
dc.subjectCOLLECTIVE AGREEMENT
dc.subjectCOLLECTIVE AGREEMENTS
dc.subjectCOLLECTIVE BARGAINING
dc.subjectCOLLECTIVE BARGAINING AGREEMENTS
dc.subjectCOMPANY
dc.subjectCOMPETITIVE MARKETS
dc.subjectDISMISSAL
dc.subjectECONOMIC SHOCKS
dc.subjectEFFICIENCY WAGE MODELS
dc.subjectEFFICIENCY WAGE THEORIES
dc.subjectEFFICIENCY WAGE THEORY
dc.subjectEFFICIENCY WAGES
dc.subjectEMPLOYEE
dc.subjectEMPLOYEE TURNOVER
dc.subjectEMPLOYERS
dc.subjectEMPLOYMENT CONTRACTS
dc.subjectEMPLOYMENT TURNOVER
dc.subjectEQUILIBRIUM UNEMPLOYMENT
dc.subjectEXISTING WORKFORCE
dc.subjectEXPANSIONS
dc.subjectEXPLICIT CONTRACTS
dc.subjectFIRING
dc.subjectFIRM LEVEL
dc.subjectFIRM SIZE
dc.subjectFIRM SURVEY
dc.subjectFIRMS
dc.subjectFOREIGN OWNERSHIP
dc.subjectHIGH WAGES
dc.subjectHIRING
dc.subjectHUMAN CAPITAL
dc.subjectHUMAN RESOURCES
dc.subjectIMPLICIT CONTRACTS
dc.subjectINCOME
dc.subjectINDUSTRIAL RELATIONS
dc.subjectJOB EXPERIENCE
dc.subjectJOBS
dc.subjectLABOR CONTRACTS
dc.subjectLABOR ECONOMICS
dc.subjectLABOR FORCE
dc.subjectLABOR MARKET
dc.subjectLABOR MARKET FLEXIBILITY
dc.subjectLABOR MARKET REFORM
dc.subjectLABOR MARKET REFORMS
dc.subjectLABOR MARKETS
dc.subjectLABOR PRODUCTIVITY
dc.subjectLABOR REGULATION
dc.subjectLABOR RELATIONS
dc.subjectLABOR TURNOVER
dc.subjectLABOUR
dc.subjectLABOUR COST
dc.subjectLABOUR COSTS
dc.subjectLABOUR FORCE
dc.subjectLABOUR MARKET
dc.subjectLABOUR MARKET INSTITUTIONS
dc.subjectLABOUR MARKET PARTICIPANTS
dc.subjectLABOUR MARKET REFORM
dc.subjectLABOUR MARKETS
dc.subjectLABOUR REGULATION
dc.subjectLABOUR REGULATIONS
dc.subjectLABOUR RELATIONS
dc.subjectLABOUR TURNOVER
dc.subjectLABOUR UNIONS
dc.subjectLAYOFFS
dc.subjectLONG-TERM EMPLOYMENT
dc.subjectMONITORING COSTS
dc.subjectMOTIVATION
dc.subjectNOMINAL WAGES
dc.subjectPOLITICAL ECONOMY
dc.subjectPREVIOUS STUDIES
dc.subjectPROBIT REGRESSIONS
dc.subjectPRODUCT MARKET
dc.subjectPRODUCT MARKET COMPETITION
dc.subjectPRODUCTION PROCESS
dc.subjectREAL WAGE
dc.subjectREAL WAGES
dc.subjectRECRUITMENT
dc.subjectREMUNERATION
dc.subjectRETAIL TRADE
dc.subjectRISING UNEMPLOYMENT
dc.subjectSKILLED EMPLOYEES
dc.subjectSKILLED WORKERS
dc.subjectSTAFF
dc.subjectTEMPORARY WORKERS
dc.subjectTOTAL EMPLOYMENT
dc.subjectTRADE UNIONS
dc.subjectTRAINING COST
dc.subjectTRAINING COSTS
dc.subjectUNDEREMPLOYMENT
dc.subjectUNEMPLOYMENT
dc.subjectUNEMPLOYMENT INSURANCE
dc.subjectUNION DENSITIES
dc.subjectUNIONIZATION
dc.subjectWAGE BARGAINING
dc.subjectWAGE BARGAINING SYSTEMS
dc.subjectWAGE BILL
dc.subjectWAGE DETERMINATION
dc.subjectWAGE DISPERSION
dc.subjectWAGE FLEXIBILITY
dc.subjectWAGE INCREASE
dc.subjectWAGE LEVEL
dc.subjectWAGE RIGIDITIES
dc.subjectWAGE RIGIDITY
dc.subjectWHITE COLLAR WORKERS
dc.subjectWORKER
dc.subjectWORKER MORALE
dc.subjectWORKER PRODUCTIVITY
dc.subjectWORKERS
dc.subjectWORKING CONDITIONS
dc.titleWhy Firms Avoid Cutting Wages : Survey Evidence from European Firmsen
dspace.entity.typePublication
okr.crosscuttingsolutionareaJobs
okr.crossref.titleWhy Firms Avoid Cutting Wages: Survey Evidence from European Firms
okr.date.disclosure2014-07-01
okr.date.doiregistration2025-04-10T11:05:03.920447Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2014/07/19878434/firms-avoid-cutting-wages-survey-evidence-european-firms
okr.globalpracticeMacroeconomics and Fiscal Management
okr.globalpracticeSocial Protection and Labor
okr.globalpracticeFinance and Markets
okr.guid453751468037522557
okr.identifier.doi10.1596/1813-9450-6976
okr.identifier.externaldocumentum000158349_20140722152149
okr.identifier.internaldocumentum19878434
okr.identifier.reportWPS6976
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2014/07/22/000158349_20140722152149/Rendered/PDF/WPS6976.pdfen
okr.region.administrativeEurope and Central Asia
okr.region.geographicalEurope
okr.topicFinance and Financial Sector Development::Microfinance
okr.topicMacroeconomics and Economic Growth::Income
okr.topicSocial Protections and Labor::Labor Policies
okr.topicSocial Protections and Labor::Labor Markets
okr.topicSocial Protections and Labor::Labor Management and Relations
okr.unitOffice of the Chief Economist, Latin America and the Caribbean Region
okr.volume1 of 1
relation.isAuthorOfPublication6610b5d1-45b5-5f8a-864f-5d79bae5927c
relation.isAuthorOfPublication.latestForDiscovery6610b5d1-45b5-5f8a-864f-5d79bae5927c
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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