Indexation and wage change settlement: evidence from Spanish manufacturing firms

A study was conducted to examine a joint framework for wage changes and cost of living allowances at various manufacturing companies in Spain. The relationship between non-indexed wage and market conditions were analyzed. The study also examined institutional factors that influence the country's labor market. Results indicated that workers pay a significant ex-ante change premium to realize a cost of living allowance clause. Findings also showed spillover effects in wage setting.