TY  - RPRT
        AU  - Reyes, Germán
        TI  - Coarse Wage-Setting and Behavioral Firms
        PY  - 2024/May/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 17039
        UR  - https://www.iza.org/index.php/publications/dp17039
        AB  - This paper shows that the bunching of wages at round numbers is partly driven by firm coarse wage-setting. Using data from over 200 million new hires in Brazil, I first establish that contracted salaries tend to cluster at round numbers. Then, I show that firms that tend to hire workers at round-numbered salaries have worse market outcomes. Next, I develop a wage-posting model in which optimization costs lead to the adoption of coarse rounded wages and provide evidence supporting two model predictions using two research designs. Finally, I examine some consequences of coarse wage-setting for relevant economic outcomes.
        KW  - bunching at round numbers
KW  - behavioral firms
KW  - wage-setting
        ER  -