Do Bonuses Offset the Allocative Effects of Downward Rigid Base Wages?
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Date
2022-05
Publication Type
Conference Paper
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yes
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Abstract
We measure the labor market outcomes of employees with downward rigid base wages after an unexpected deflationary shock in Switzerland using a firm survey matched with Social Security register data. The employees that additionally receive downward flexible compensation, such as bonuses, are less likely to lose their job after a deflationary shock than those only receiving a base wage. Only a modest share of employees receives downward flexible compensation, however. Therefore, these compensation schemes do not offset the overall allocative effects of downward rigid base wages.
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published
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Journal / series
Volume
112
Pages / Article No.
486 - 490
Publisher
American Economic Association
Event
134th Annual Meeting of the American-Economic-Association (AEA 2022)