Real Wage Cyclicality in the PSID

FRB of San Francisco Working Paper No. 2007-15

41 Pages Posted: 2 Nov 2007  

Eric T. Swanson

University of California, Irvine - Department of Economics

Date Written: July 2007

Abstract

Previous studies of real wage cyclicality have made only sparing use of the microdata detail that is available in the Panel Study of Income Dynamics (PSID). The present paper brings to bear this additional detail to investigate the robustness of previous results and to examine whether there are important cross-sectional and demographic differences in wage cyclicality. Although real wages were procyclical across the entire distribution of workers from 1967 to 1991, the wages of lower-income, younger, and less-educated workers exhibited greater procyclicality. However, workers' straight-time hourly pay rates have been acyclical, suggesting that more variable pay margins such as bonuses, overtime, late shift premia, and commissions have played a substantial if not primary role in generating procyclicality.

Keywords: wages, labor market

Suggested Citation

Swanson, Eric T., Real Wage Cyclicality in the PSID (July 2007). Available at SSRN: https://ssrn.com/abstract=1026367 or http://dx.doi.org/10.2139/ssrn.1026367

Eric T. Swanson (Contact Author)

University of California, Irvine - Department of Economics ( email )

University of California, Irvine
3151 Social Science Plaza
Irvine, CA 92697-5100
United States
(949) 824-8305 (Phone)

HOME PAGE: http://www.ericswanson.org

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