Downward Nominal-Wage Rigidity: Micro Evidence from Tobit Models

  title={Downward Nominal-Wage Rigidity: Micro Evidence from Tobit Models},
  author={John A. Crawford and Geoff A. Wright},
This paper uses Tobit models and data for union contracts to examine the extent of downward nominal-wage rigidity in Canada. To be consistent with important stylized facts, the models allow the variance of the notional wage-change distribution to be time-varying and test for menu-cost effects. The empirical results confirm the importance of using a general specification with a timechanging variance and menu-cost effects. The variance of the notional distribution fell as inflation trended… CONTINUE READING


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