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Nominal Wage Rigidity in Village Labor Markets / Supreet Kaur.
- Format:
- Book
- Author/Creator:
- Kaur, Supreet.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w20770.
- NBER working paper series no. w20770
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2014.
- Summary:
- This paper tests for downward nominal wage rigidity by examining transitory shifts in labor demand, generated by rainfall shocks, in 600 Indian districts from 1956-2009. Nominal wages rise in response to positive shocks but do not fall during droughts. In addition, transitory positive shocks generate ratcheting: after they have dissipated, nominal wages do not adjust back down. This ratcheting effect generates a 9% reduction in employment levels. Inflation enables downward real wage adjustments both during droughts and after positive shocks. Survey evidence suggests that workers and employers believe that nominal wage cuts are unfair and lead to effort reductions.
- Notes:
- Print version record
- December 2014.
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