ASYMMETRIES AND RIGIDITIES IN WAGE ADJUSTMENTS BY FIRMS

We use micro data from a survey of firms to test for labor market rigi dities and asymmetries in response to demand shifts. We analyze wage a nd employment adjustments to positive and negative shifts, as measured by real sales growth. The results show that wage adjustments are fair ly small compared with employment adjustments. They are also asymmetri c, with significant adjustments in response to positive shifts but not negative shifts. These asymmetries are no more pronounced in large fi rms, manufacturing, heavily-union or highly-skilled industries than in other firms or industries. In contrast, employment adjustments show n o consistent pattern of asymmetry.