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Wage Resilience in France since the Great Recession

Author

Listed:
  • D. AUDENAERT

    (Insee)

  • J. BARDAJI

    (Insee)

  • R. LARDEUX

    (Insee)

  • M. ORAND

    (Insee)

  • M. SICSIC

    (Insee)

Abstract
From 2009 onwards, the slowdown in French real wages was less acute than that in labour productivity, which pulled French firms margin rate down. This article deals with this recent disconnection and surveys two potential explanatory hypotheses: labour force composition effects and downward nominal wage rigidities. The first assumption is related to the impact on the average wage of increasing job losses, especially when they are concentrated on lower-paid workers. Labour force structure evolution does contribute to wage resilience, but with little difference between 2009 and the period before, in which we observe a long run increasing trend of the working population toward a higher qualification. The downward nominal wage rigidities assumption is bounded by the empirical evidence of a significant amount of wage drops, while wage freezes are rare. Furthermore, in 2009, wages decreased faster as the firms activity dropped than they increased as the firms situation improved. However, the estimation, done at the wage earner level, shows the low response of wages to a (positive or negative) activity shock, especially for lower wage earners and large firms. The elasticity of wages with respect to a negative shock, though increasing in 2009, remains low in absolute terms. This wage inertia would facilitate the recovery of the firms margin rate in times of strong economic upturn.

Suggested Citation

  • D. Audenaert & J. Bardaji & R. Lardeux & M. Orand & M. Sicsic, 2014. "Wage Resilience in France since the Great Recession," Documents de Travail de l'Insee - INSEE Working Papers g2014-11, Institut National de la Statistique et des Etudes Economiques.
    • Handle: RePEc:nse:doctra:g2014-11
    as

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    File Function: Document de travail de la DESE numéro G2014-11
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    References listed on IDEAS

    as
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    Cited by:

    1. Verdugo, Gregory, 2016. "Real wage cyclicality in the Eurozone before and during the Great Recession: Evidence from micro data," European Economic Review, Elsevier, vol. 82(C), pages 46-69.
    2. Clémence Berson & Marta de Philippis & Eliana Viviano, 2020. "Job-to-Job Flows and Wage Dynamics in France and Italy," Working papers 756, Banque de France.
    3. V. Dortet-Bernadet & M. Sicsic, 2015. "The effect of public support on R&D employment in small firms," Documents de Travail de l'Insee - INSEE Working Papers g2015-11, Institut National de la Statistique et des Etudes Economiques.

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    More about this item

    Keywords

    Wages; Rigidity; Labour force structure; Cointegration;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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