Wage reductions during recessions

This masters thesis is intended to plug the gap in data on the opinions of employees on wage reductions, where most literature is based on qualitative research with managers. A survey was undertaken among 233 Dutch employees who were all members of the RMU, a social union. Results show that the exemplary role of managers has a significant effect on the acceptance of wage reductions. Furthermore, the importance of fairness in the procedure of pay cuts is consistent with the existing empirical research. I found no support for theories and models about the rigidity of wages. Finally, I conclude with the implications of this research and discuss some interesting directions for future research.