• Corpus ID: 249282638

Coarse Wage-Setting and Behavioral Firms

@inproceedings{Reyes2022CoarseWA,
  title={Coarse Wage-Setting and Behavioral Firms},
  author={German Jeremias Reyes},
  year={2022}
}
This paper shows that the bunching of wages at round numbers is partly driven by firm coarse wage-setting. Using data on 280 million new hires from Brazil, I first establish that salaries tend to cluster at round numbers. Then, I show that firms that tend to hire workers at round-numbered salaries are less sophisticated and have worse market outcomes. Next, I develop a wage-posting model in which optimization costs lead to the adoption of coarse rounded wages and provide evidence supporting… 

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