Wages and Unemployment Across Business Cycles: A High-Frequency Investigation
34 Pages Posted: 22 Mar 2015
Date Written: October 2012
This paper investigates the change in wages associated with a spell of unemployment. The novelty lies in using monthly data from the Survey of Income and Program Participation (SIPP) to analyze the dynamics of those wage changes across different business cycles. The level of education or the sector of re-employment affects the change in wages following an unemployment spell differently across different downturns. The degree of wage rigidity varies across recessions; wage changes pre- and post-unemployment are sometimes procyclical and sometimes countercyclical. These results may be useful for understanding the different aggregate employment dynamics observed across downturns and recoveries.
Keywords: wage rigidity, unemployment duration, jobless recoveries
JEL Classification: E24, J31
Suggested Citation: Suggested Citation