A Note on Labor Contracts and Wage Rigidities: An Empirical Investigation Using Survey Data

Wage (and price) rigidities are often blamed for sluggish adjustment of labour markets and low employment dynamics. In this note we study the role of contractual wage arrangements on firms support for theoretical explanations of wage rigidity using a survey on wage flexibility and employment in Germany conducted in 2000. As a result respondents’ support seems to be not sensitive with respect to the type of wage contract. Individual firms wage policies may be more influenced by economic forces and less by the legal type of wage contract.

Franz, Wolfgang and Friedhelm Pfeiffer (2005), A Note on Labor Contracts and Wage Rigidities: An Empirical Investigation Using Survey Data, Applied Economics Quarterly 51 (2) , 219-228