ABSTRACT
The institutional aspects of the collective bargaining system play a central role in the determination of nominal wage rigidities. Through collective negotiations, firms and their employees agree upon wage levels that reflect productivity and other characteristics of the firm and the market into which it operates. It is well established that under normal economic circumstances, nominal wage floors rarely adjust downwards. However, Daouli et al. (2016) show that during deep and prolonged recessions, such in the case of Greece, most wage floors defined in firm-level collective agreements downgraded due to firm-specific attributes and specific institutional factors.
