Definition of Sticky Wages

Sticky wages are the term that is used when employees' incomes do not adjust quickly to changing labor market conditions. This can slow the economic recovery from a recession. When the demand for a good falls, the price usually falls too. In this way, the markets adjust to ensure that the number of willing suppliers matches the number of willing buyers.


One of the many explanations for unemployment is sticky wages. Economists believe that there will always be a minimum level of unemployment because workers need time to look for the best jobs.

View More Macroeconomics Definitions