() and Per Lundborg
Jonas Agell: Department of Economics, Uppsala University, Postal: Box 513, SE-751 20 Uppsala, Sweden
Per Lundborg: Trade Union Institute for Economic Research, Postal: FIEF, Wallingatan 38, SE-111 24 Stockholm, Sweden
Abstract: We present the results from a repeat survey on wage rigidity in a sample of 159 Swedish firms, conducted during a prolonged period of very high unemployment and very low inflation. We document the virtual absence of wage cuts, and trace this pervasive nominal rigidity to a set of interacting factors, including the legal status of the wage contract, the structure of bargaining institutions, and the design of social insurance. But employees’ concerns about fairness and relative wages also appear to play an important role. In addition, we report new results on underbidding, efficiency wage mechanisms, and unemployment persistence.
31 pages, October 22, 1999
Note: This paper is a revised version of Working Paper 1999:2 of the Office of Labour Market Policy Evaluation, IFAU, and Working Paper 1999:12 of Department of Economics, Uppsala University.
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