Properties of the Histogram Location Approach and the Extent and Change of Downward Nominal Wage Rigidity in the EU
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.
Are wages rigid in Colombia?: Empirical evidence based on a sample of wages at the firm level
This paper uses Colombian data at the firm level for the period 1999 to 2006 to provide microeconomic evidence on the existence and extent of downward nominal wage rigidity. To conduct the analysis, we use a rich panel of firms for white and blue collar workers, consisting of 1517 firms for the former and 781 firms for the latter. The presence of wage rigidity is determined by means of three statistic techniques used in recent literature, such as the analysis of the histograms of the distribution of wage changes, the LSW statistic and the Kahn test. The results suggest the existence of downward nominal wage rigidities; it is worth mentioning that rigidity is higher for blue collar workers than white collar workers, since the increase in the wages of the blue workers is generally done by taking into account the change in the minimum wage, which is why a higher rigidity would be expected.
Tax evasion in transition : outcome of an institutional clash? - Testing Feige's conjecture
A field survey of households was conducted in Tirana, Albania in 2000. A response rate of 89.3% yielded 1.340 valid questionnaires, allowing us to test Feige’s (1997) conjecture that more tax evasion will be observed, when formal and informal institutions clash. Respondents’ attitudes towards formal and informal institutions were obtained by applying factor analysis to the responses to a series of attitudinal questions. The results of the analysis support Feige’s conjecture. An important implication is that when studying tax evasion one should take country specific institutions (and their interaction) into account.