STICKY WAGES REVISITED - ORGANIZATIONAL RESPONSES TO A DECLINING MARKET-CLEARING WAGE

Although employers traditionally have maintained existing real wages i n the face of a declining market-clearing (equilibrium) wage (the ''st icky wages'' phenomenon), it has recently been observed that some firm s reduce real wages in this situation. in order to understand the vari ed ways in which employers respond to or decline in the clearing wage, this article develops ct framework integrating perspectives from effi ciency wage theory with perspectives from human resource management, i nstitutional economics. and strategic management. The framework sugges ts that such varied responses result from variation in factors likely to inhibit reductions. even when reductions would be efficient and var iation in factors likely to affect the efficiency of reducing wages. T he implications of the framework for research and practice are also di scussed.