Munich Personal RePEc Archive

Wage and price setting behaviour of Lithuanian firms: survey-based evidence for 2008–2009 and 2010–2013

Pesliakaite, Jurgita and Šiaudvytis, Tomas (2015): Wage and price setting behaviour of Lithuanian firms: survey-based evidence for 2008–2009 and 2010–2013.

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Abstract

This paper gives a broad descriptive overview on wage and price setting behaviour of Lithuanian firms during the last episode of the economic crisis in 2008–2009 and in the post¬-crisis period of 2010–2013. The evidence provided in this paper is based on the firm¬¬-level data from the third wave of the Wage Dynamic Network (WDN3) survey ¬— the joint research project of the European Union (EU) countries launched within the European System of Central Banks (ESCB). Wage and price setting strategies of Lithuanian firms were evaluated by relating firms’ decision-making to the macroeconomic, financial and institutional environment under which the firms are operating. The preliminary conclusion drawn in this paper is that both wages and prices show rather high degree of flexibility in Lithuania. Low wage rigidity should primarily be attributable to labour market institutions — low collective wage bargaining coverage and completely decentralised wage setting process. Easing of employment protection laws during the last episode of economic downturn might also have contributed to the increased wage flexibility in the after-crisis period.

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