Wage rigidity and job creation

Christian Haefke; Marcus Sonntag; Thijs van Rens

doi:10.1016/j.jmoneco.2013.09.003

Wage rigidity and job creation

Christian Haefke, Marcus Sonntag, Thijs van Rens

Economics

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

Abstract

Recent research in macroeconomics emphasizes the role of wage rigidity in accounting for the volatility of unemployment fluctuations. We use worker-level data from the CPS to measure the sensitivity of wages of newly hired workers to changes in aggregate labor market conditions. The wage of new hires, unlike the aggregate wage, is volatile and responds almost one-to-one to changes in labor productivity. We conclude that there is little evidence for wage rigidity in the data.

Original language	English (US)
Pages (from-to)	887-899
Number of pages	13
Journal	Journal of Monetary Economics
Volume	60
Issue number	8
DOIs	https://doi.org/10.1016/j.jmoneco.2013.09.003
State	Published - Nov 2013

Keywords

Business cycle
Search and matching model
Wage rigidity

ASJC Scopus subject areas

Finance
Economics and Econometrics

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10.1016/j.jmoneco.2013.09.003

Cite this

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title = "Wage rigidity and job creation",

abstract = "Recent research in macroeconomics emphasizes the role of wage rigidity in accounting for the volatility of unemployment fluctuations. We use worker-level data from the CPS to measure the sensitivity of wages of newly hired workers to changes in aggregate labor market conditions. The wage of new hires, unlike the aggregate wage, is volatile and responds almost one-to-one to changes in labor productivity. We conclude that there is little evidence for wage rigidity in the data.",

keywords = "Business cycle, Search and matching model, Wage rigidity",

author = "Christian Haefke and Marcus Sonntag and {van Rens}, Thijs",

note = "Funding Information: We gratefully acknowledge financial support from the Jubil{\"a}umsfonds of the Austrian Central Bank; the Spanish Ministry of Education and Sciences , grants Ju{\'a}n de la Cierva, SEJ2005-01124 , SEJ2006-02235 and ECO2008-01665 ; the Generalitat de Catalunya, DIUE grants Beatriu de Pin{\'o}s and 2009SGR-1157 ; and the Barcelona GSE Research Network .",

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AU - van Rens, Thijs

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AB - Recent research in macroeconomics emphasizes the role of wage rigidity in accounting for the volatility of unemployment fluctuations. We use worker-level data from the CPS to measure the sensitivity of wages of newly hired workers to changes in aggregate labor market conditions. The wage of new hires, unlike the aggregate wage, is volatile and responds almost one-to-one to changes in labor productivity. We conclude that there is little evidence for wage rigidity in the data.

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KW - Search and matching model

KW - Wage rigidity

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Wage rigidity and job creation

Abstract

Keywords

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