Wage adjustment in the great recession and other downturns: Evidence from the United States and Great Britain

Michael Elsby, Donggyun Shin, Gary Solon

Research output: Contribution to journalArticlepeer-review

Abstract / Description of output

Using 1979–2012 CPS data for the United States and 1975–2012 NES data for Great Britain, we study wage behavior in both countries, with particular attention to the Great Recession. Real wages are procyclical in both countries, but the procyclicality of real wages varies across recessions, and does so differently between the two countries, in ways that defy simple explanations. We devote particular attention to the hypothesis that downward nominal wage rigidity plays an important role in cyclical employment and unemployment fluctuations. We conclude that downward wage rigidity may be less binding and have lesser allocative consequences than is often supposed.
Original languageEnglish
Pages (from-to)249-291
JournalJournal of Labor Economics
Volume34
Issue number1
Early online date16 Dec 2015
DOIs
Publication statusPublished - Jan 2016

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