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    Determinants of wage stickiness in a developing economy

    Ahmed, W. and Choudhary, M.A. and Khan, S. and Naeem, S. and Zoega, Gylfi (2014) Determinants of wage stickiness in a developing economy. Economic Modelling 38 , pp. 296-304. ISSN 0264-9993.

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    Abstract

    We explore wage flexibility in a developing country and compare our results to what has been found in similar studies using European data. In particular, we conduct a survey of 1189 firms in Pakistan to analyze the determinants of wage rigidity. We find that the existence of competitive wages and an interaction with the informal economy are statistically significant determinants of wage stickiness. While the role of competitive wages is similar to what has been found in studies of European firms, the latter find a much larger role for turnover, collective bargaining and employment protection. In contrast, in Pakistan we find that firms hiring from the informal sector are significantly more flexible in changing their wages. This suggests that the informal sector adds to the wage flexibility of the formal sector.

    Metadata

    Item Type: Article
    Keyword(s) / Subject(s): Survey of employers, Wage rigidity, Labor market institutions, Monetary policy
    School: Birkbeck Schools and Departments > School of Business, Economics & Informatics > Economics, Mathematics and Statistics
    Research Centre: Applied Macroeconomics, Birkbeck Centre for
    Depositing User: Administrator
    Date Deposited: 07 Apr 2014 15:06
    Last Modified: 07 Dec 2016 14:54
    URI: http://eprints.bbk.ac.uk/id/eprint/9555

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