Please use this identifier to cite or link to this item: http://arl.liuc.it/dspace/handle/2468/5675
Title: Properties of the histogram location approach and the extent and change of downward nominal wage rigidity in the EU
Authors: Behr, Andreas
Issue Date: 2006
Publisher: European Association for Comparative Economic Studies (EACES)
Università Carlo Cattaneo - LIUC
Bibliographic citation: Behr Andreas (2006), Properties of the histogram location approach and the extent and change of downward nominal wage rigidity in the EU. In: The European Journal of Comparative Economics, vol. 3, n. 1, 2006, p. 15-29. E-ISSN 1824-2979.
Abstract: The histogram location approach has been proposed by Kahn (1997) to estimate the fraction of wage cuts prevented by downward nominal wage rigidity. In this paper, we analyze the validity of the approach by means of a simulation study which yielded evidence of unbiasedness but also of potential underestimation of rigidity parameter uncertainty and therefore of potential anticonservative inference. We apply the histogram location approach to estimate the extent of downward nominal wage rigidity across the EU for 1995-2001. Our data base is the User Data Base (UDB) of the European Community Household Panel (ECHP). The results show wide variation in the fraction of wage cuts prevented by nominal wage rigidity across the EU. The lowest rigidity parameters are found for the UK, Spain and Ireland, the largest for Portugal and Italy. Analyzing the change of rigidity between sub periods 1995-1997 and 1999-2001 even shows an widening of the differences in nominal wage rigidity. Due to the finding of large differences across the EU, the results imply that the costs of low inflation policies across the EU differ substantially.
URI: http://arl.liuc.it/dspace/handle/2468/5675
Journal/Book: The European journal of comparative economics
Appears in Collections:EJCE

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