Measuring What Employers Really Do about Entry Wages over the Business Cycle

Jonathan Thomas; Gary Solon; Pedro Martins

doi:10.1257/mac.4.4.36

Measuring What Employers Really Do about Entry Wages over the Business Cycle

Jonathan Thomas, Gary Solon, Pedro Martins

School of Economics

Research output: Contribution to journal › Article › peer-review

Abstract

Rigidity in real hiring wages plays a crucial role in some recent macroeconomic models. But are hiring wages really so noncyclical? We propose using employer/employee longitudinal data to track the cyclical variation in the wages paid to workers newly hired into specific entry jobs. Illustrating the methodology with 1982-2008 data from the Portuguese census of employers, we find real entry wages were about 1.8 percent higher when the unemployment rate was 1 percentage point lower. Like most recent evidence on other aspects of wage cyclicality, our results suggest that the cyclical elasticity of wages is similar to that of employment. (JEL E24, E32, J31, J64)

Original language	English
Article number	NA
Pages (from-to)	36-55
Number of pages	19
Journal	American Economic Journal: Macroeconomics
Volume	4
Issue number	4
DOIs	https://doi.org/10.1257/mac.4.4.36
Publication status	Published - Oct 2012

Access to Document

10.1257/mac.4.4.36

Measuring what employers do
Copyright © 2012 by the American Economic Association. Permission to make digital or hard copies of part or all of American Economic Association publications for personal or classroom use is granted without fee provided that copies are not distributed for profit or direct commercial advantage and that copies show this notice on the first page or initial screen of a display along with the full citation, including the name of the author. Copyrights for components of this work owned by others than AEA must be honored. Thomas, J., Solon, G., & Martins, P. (2012). Measuring What Employers Really Do about Entry Wages over the Business Cycle. American Economic Journal: Macroeconomics, 4(4), 36-55 doi: 10.1257/mac.4.4.36
Submitted manuscript, 566 KB

http://www.aeaweb.org/articles.php?doi=10.1257/mac.4.4.36

Cite this

@article{299a236ede2846e288e1ee7f29f26d1d,

title = "Measuring What Employers Really Do about Entry Wages over the Business Cycle",

abstract = "Rigidity in real hiring wages plays a crucial role in some recent macroeconomic models. But are hiring wages really so noncyclical? We propose using employer/employee longitudinal data to track the cyclical variation in the wages paid to workers newly hired into specific entry jobs. Illustrating the methodology with 1982-2008 data from the Portuguese census of employers, we find real entry wages were about 1.8 percent higher when the unemployment rate was 1 percentage point lower. Like most recent evidence on other aspects of wage cyclicality, our results suggest that the cyclical elasticity of wages is similar to that of employment. (JEL E24, E32, J31, J64)",

author = "Jonathan Thomas and Gary Solon and Pedro Martins",

year = "2012",

month = oct,

doi = "10.1257/mac.4.4.36",

language = "English",

volume = "4",

pages = "36--55",

journal = "American Economic Journal: Macroeconomics",

issn = "1945-7707",

publisher = "American Economic Association",

number = "4",

}

TY - JOUR

T1 - Measuring What Employers Really Do about Entry Wages over the Business Cycle

AU - Thomas, Jonathan

AU - Solon, Gary

AU - Martins, Pedro

PY - 2012/10

Y1 - 2012/10

N2 - Rigidity in real hiring wages plays a crucial role in some recent macroeconomic models. But are hiring wages really so noncyclical? We propose using employer/employee longitudinal data to track the cyclical variation in the wages paid to workers newly hired into specific entry jobs. Illustrating the methodology with 1982-2008 data from the Portuguese census of employers, we find real entry wages were about 1.8 percent higher when the unemployment rate was 1 percentage point lower. Like most recent evidence on other aspects of wage cyclicality, our results suggest that the cyclical elasticity of wages is similar to that of employment. (JEL E24, E32, J31, J64)

AB - Rigidity in real hiring wages plays a crucial role in some recent macroeconomic models. But are hiring wages really so noncyclical? We propose using employer/employee longitudinal data to track the cyclical variation in the wages paid to workers newly hired into specific entry jobs. Illustrating the methodology with 1982-2008 data from the Portuguese census of employers, we find real entry wages were about 1.8 percent higher when the unemployment rate was 1 percentage point lower. Like most recent evidence on other aspects of wage cyclicality, our results suggest that the cyclical elasticity of wages is similar to that of employment. (JEL E24, E32, J31, J64)

U2 - 10.1257/mac.4.4.36

DO - 10.1257/mac.4.4.36

M3 - Article

AN - SCOPUS:84872200153

SN - 1945-7707

VL - 4

SP - 36

EP - 55

JO - American Economic Journal: Macroeconomics

JF - American Economic Journal: Macroeconomics

IS - 4

M1 - NA

ER -

Measuring What Employers Really Do about Entry Wages over the Business Cycle

Abstract

Access to Document

Fingerprint

Cite this