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Article: Properties of the histogram location approach and the extent and change of downward nominal wage rigidity in the EU.
- Article from:
- The European Journal of Comparative Economics
- Article date:
- June 1, 2006
- Author:
CopyrightCOPYRIGHT 2006 Mario Rostoni Library - Universita Carlo Cattaneo- LIUC. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Abstract
The histogram location approach has been proposed by Kahn (1997) to estimate the fraction of wage cuts prevented by downward nominal wage rigidity. In this paper, we analyze the validity of the approach by means of a simulation study which yielded evidence of unbiasedness but also of potential underestimation of rigidity parameter uncertainty and therefore of potential anticonservative inference.
We apply the histogram location approach to estimate the extent of downward nominal wage rigidity across the EU for 1995-2001. Our data base is the User Data Base (UDB) of the European Community Household Panel (ECHP). The results show wide variation in ...