Explaining wage stickiness
A paper published in late November by the Bank of Estonia puts forth some explanations for why European employers find it difficult to cut wages. Noting that this phenomenon is well recorded, the paper, entitled ‘Downward nominal and real wage rigidity: survey evidence from European firms', analyses firm- and institutional-level factors to explain why it occurs.
A survey conducted for the paper shows that while a "substantial proportion" of respondents reported frozen wages or said that there
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