Wage Rigidity: A Look Inside the Firm

摘要

This paper tests for nominal salary rigidity using panel data from two large211u001eservice-sector firms. Distributions of the firms' salary changes exhibit nominal 211u001erigidity: few nominal wage cuts, a pile-up of observations at zero, and positive 211u001eskewness and asymmetry. In addition, these characteristics become more pronounced 211u001ein periods of low inflation. These results are much stronger than those found in 211u001ethe previous literature. Further analysis shows that the sizable measurement 211u001eerror in the PSID and the fact that establishment surveys typically follow 211u001eaverage wages within jobs may bias results in the previous literature toward 211u001erejecting downward nominal wage rigidity.