European Regional Development Fund

About this article

Publish date:
18/10/2013

Author:
BlackDigits

Overall rating:
1 2 3 4 5

Your rating
Login to rate this article.

Why (don't) wages fall in a recession?

Published 6 years ago by BlackDigits

Question: Don't wages fall all the time? 

Answer: Real wages fall all the time, and nominal wages often fall when workers change jobs.  But nominal wages hardly ever fall for a given worker at a given job - even when there's massive excess supply of qualified labor.

Question: OK, so why don't nominal wages fall for given workers at given jobs? 

Answer: Because almost all employers realize that nominal wage cuts are terrible for morale - and bad morale is bad for worker productivity.”

Source: http://www.pieria.co.uk/articles/wages_and_the_great_recession

Share with your friends

Comments

  • Login to post your comments