Downward Nominal Wage Rigidity in Italy: Evidence and Consequences

  title={Downward Nominal Wage Rigidity in Italy: Evidence and Consequences},
  author={Francesco Devicienti},
This paper uses administrative longitudinal micro-data from the Italian Social Security Institute (INPS) to estimate the extent of downward nominal wage rigidity. The determinants of wage changes are explicitly modelled, as is the measurement error deriving from the fact that earnings inclusive of benefits, not hourly wages, are available in the data. Estimates show that the degree of downward nominal wage rigidity is medium/high – between 51% and 68% of all notional wage cuts being prevented… CONTINUE READING


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