Effrosyni Adamopoulou, Luis Díez Catalán, Ernesto Villanueva
Wage rigidity – for example, due to collective contracts – can generate employment fluctuations, particularly during economic downturns. This column studies the impact of downward nominal wage rigidity on wage and employment dynamics during the 1993 and 2009 recessions in Spain. It shows that collective contracts renegotiated just before the recession led to higher wage growth for the first year of the downturn compared to those signed afterwards. Furthermore, it finds that wage inflexibility increases non-employment for workers close to the minimum wage floors due to lengthy collective contracts (particularly pronounced in 2009) signed before the onset of the downturn.
Πηγή: Voxeu