Abstract
While economists historically have considered wages rigid downwards, recent studies have shown that cuts in nominal wages are more common than previously thought. The deep recession experienced in Iceland in 2008, coupled with Iceland’s flexible labor market provided an extreme example of a labor market that experienced widespread and deep cuts in nominal wages. Data covering two-fifths of the labor market showed that 80% of employees experienced a nominal cut in regular hourly wages between 2008 and 2010. The data was collected directly from organizations, and excluded the effects of a change in hours worked. Nominal hourly wages for full time work were cut by 9.3% on average, at the same time inflation measured 18%.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
