%0 Report
        %A Reyes, Germán
        %T Coarse Wage-Setting and Behavioral Firms
        %D 2024
        %8 2024 May
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 17039
        %U https://www.iza.org/publications/dp17039
        %X 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.
        %K bunching at round numbers
%K behavioral firms
%K wage-setting