English, Article, Journal or magazine article edition: Wages and the Risk of Displacement Anabela Carneiro; Pedro Portugal

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Bookmark: http://trove.nla.gov.au/version/182181
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Wages and the Risk of Displacement
Author
  • Anabela Carneiro
  • Pedro Portugal
Physical Description
  • preprint
Notes
  • RePEc:por:cetedp:0308
  • In this paper a simultaneous-equations model of firm closing and wage determination is developed in order to analyse how wages adjust to unfavorable shocks that raise the risk of displacement through firm closing, and to what extent a wage change affects the exit likelihood. Using a longitudinal matched worker-firm data set from Portugal, the results show that the fear of job loss generates wage concessions instead of compensating differentials. A novel result that emerges from this study is that firms with a higher incidence of minimum wage earners are more vulnerable to adverse demand shocks due to their inability to adjust wages downward. In fact, minimum wage restrictions were seen to increase the failure rates.
  • wages, displacement risk, concessions
  • RePEc:iza:izadps:dp1926
Language
  • English
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