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How Rigid are Nominal Wages? Evidence and Implications for Germany

Knoppik, Christoph ; Beissinger, Thomas



Abstract

Many recent attempts to find evidence on downward nominal wage rigidity in micro data have suffered from problems such as composition bias and the effects of measurement error. In this paper, a model of proportional downward nominal wage rigidity is developed which avoids these problems by taking into account the determinants of wage changes and the measurement process that leads to observable ...

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