Wage Flexibility and Economic Performance: Evidence Across Industrial Countries

August 1, 2000

Preview Citation

Format: Chicago

Magda E. Kandil Wage Flexibility and Economic Performance: Evidence Across Industrial Countries, (USA: International Monetary Fund, 2000) accessed December 22, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper provides new empirical evidence on the degree of nominal wage flexibility in a sample of nineteen industrial countries. Across countries, aggregate uncertainty increases the degree of wage flexibility in the face of various shocks. Wage flexibility stabilizes fluctuations in real output and guarantees workers a higher real standard of living in response to aggregate demand shocks. Wage flexibility in response to energy price shocks guarantees workers higher real wages without exacerbating price inflation or output contraction. Nominal wage inflation decreases in response to productivity shocks, reinforcing output expansion.

Subject: Energy pricing, Expenditure, Inflation, Labor, Prices, Productivity, Real wages, Wage flexibility, Wages

Keywords: Aggregate demand demand shock, Demand shocks, Energy price shock, Energy price shocks, Energy pricing, Inflation, Price deflation, Price inflation, Productivity shock, Productivity shocks, Real wages, Standard deviation, Wage Flexibility, Wages, WP

Publication Details

Pages:

31
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2000/137
Stock No:

WPIEA1372000
ISBN:

9781451855906
ISSN:

1018-5941

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