employees. This paper demonstrates that also a change in outside wage options drives wages in continuing jobs. The authors use … years after the reform, the wages of employees in deregulated crafts increased by five percent less than wages of employees …

distribution: local wage flexibility is more relevant for the upper part of the wage distribution, and flexibility of wages … support our hypothesis, as employees with low wages have significantly lower local wage flexibility than high wage employees …. This effect is particularly relevant for the lower educational groups. On the other hand, employees with low wages tend to …