DP7932 Wage Rigidity, Collective Bargaining and the Minimum Wage: Evidence from French Agreement Data

Author(s): Sanvi Avouyi-Dovi, Denis Fougère, Erwan Gautier
Publication Date: July 2010
Keyword(s): downward nominal wage rigidity, minimum wage, wage bargaining, wage stickiness
JEL(s): E30, J31, J50
Programme Areas: Labour Economics
Link to this Page: http://www.cepr.org/pubs/dps/DP7932

Using several unique data sets on wage agreements at both the firm- and the industry-levels in France, we examine the impact of typical European wage-setting institutions on the form and the degree of wage rigidity. We highlight different stylized facts concerning wage stickiness. First, in France, the typical duration of a wage agreement is one year. Consequently, a Taylor (1980) -type model appears to reproduce appropriately the distribution of agreement durations. Some 30 percent of settlements stipulate several predetermined wage changes during the year following the date of signature of the agreement. The frequency of wage agreements is highly seasonal, but the dates at which agreements take effect are more staggered. The date at which the national minimum wage level is revised each year has a significant impact on the timetable of wage agreements, both at the firm- and at the industry-levels. Wage increases negotiated at these two levels mainly depend on the inflation regime, the firm profitability and the proportion of minimum-wage workers in the same industry.