This paper explores the existence of downward nominal wage rigidity (DNWR) in the
industry sectors of 14 European countries, over the period 1973–1999, using a data set of
hourly nominal wages at industry level. Based on a novel nonparametric statistical method,
which allows for country and year specific variation in both the median and the dispersion
of industry wage changes, we reject the hypothesis of no DNWR. The fraction of wage cuts
prevented due to DNWR has fallen over time, from 70 percent in the 1970s to 20 percent in
the 1990s, but the number of industries aected by DNWR has increased. Wage cuts are less
likely in countries and years with high inflation, low unemployment, high union density and
strict employment protection legislation.
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