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May/June 1999, 
Vol. 81, No. 3
Posted 1999-05-01

Are Nominal Wage Changes Skewed Away From Wage Cuts?

by Kenneth J. McLaughlin

This article sheds light on an important question for macroeconomic policy and economic theory: Are nominal wage changes skewed away from wage cuts? In particular, does downward nominal rigidity censor some would be wage cuts, transforming some wage changes that would be negative into zero-wage changes? To answer this question, the author documents key properties of the distribution of wage changes in panel data.