This study aims to analyze the downward nominal wage rigidity and the difference in degree of downward nominal wage rigidity between the economy with unemployment benefits and the economy without unemploymentbenefit. An experimental method in the form of nominal wage bargaining between employees and employers was aplied in this study. The subject of the experiment are the alumni of UPN "Veteran" Yogyakarta who havework experience at least 1 year. Panel data regression and t- test was employed

more »

... make conclusions from the experiment. Results show that there is evidence of downward nominal wage rigidity. Nominal wages in theeconomy with unemployment benefits was proved to be more rigid to decrease than the nominal wages in the economy without unemployment benefit.