Downward Nominal Wage Rigidity in Poland and Its Implications for the Monetary Policy

To test the hypothesis of downward nominal wage rigidity in Poland we used data from a survey of medium and large companies. We find relatively weak support for downward wage rigidity when average total compensation in an enterprise is analysed. However, since this result may be affected by job rotation, we propose a method for eliminating its impact and find that downward wage rigidity becomes higher. Moreover, disaggregating the data reveals strong differences among sectors, with no rigidity in highly competitive industries and significant rigidities in monopolized or state-owned sectors. The scale of rigidities seems to be lower in Poland than in other countries, although – due to differences in datasets – robust comparisons are not possible.