Firms' Reactions to the Crisis and their Consequences for the Labour Market: Results of a Company Survey Conducted in Austria

49 Pages Posted: 6 Dec 2010

Date Written: November 29, 2010

Abstract

This article is based on the results of two company surveys - the first was conducted in 2007, before the recession 2008/2009 hit Austria, and the second was conducted in 2009 shortly after the trough of it. We analyse firms’ reactions to the crisis and focus on their labour market relevant decisions. Although base wages were cut more frequently than in economically calm times, wage reductions continued to be the exception rather than the rule. This indicates the existence of nominal wage rigidities in Austria. Instead of wage cuts, firms preferred to reduce working hours and to dismiss employees. We find that firm specific characteristics as well as characteristics of the workforce help explaining a firm’s probability of dismissing employees. However, the force of the shock by which an individual firm is hit (during the 2008/2009 recession) does not influence the likelihood of dismissals.

Keywords: Wage Rigidity, Demand Shock, Micro Survey Data

JEL Classification: C25, E24, J30

Suggested Citation

Kwapil, Claudia, Firms' Reactions to the Crisis and their Consequences for the Labour Market: Results of a Company Survey Conducted in Austria (November 29, 2010). ECB Working Paper No. 1274, Available at SSRN: https://ssrn.com/abstract=1716894

Claudia Kwapil (Contact Author)

Oesterreichische Nationalbank ( email )

Otto-Wagner Platz 3
POB 61
Vienna 1011
Austria

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