The Heterogeneous Cyclicality of Income and Wages Among the Distribution
24 Pages Posted: 21 Mar 2015
Date Written: March 20, 2015
We investigate the cyclicality of real wages and income using individual data for the UK over the 1991-2008 period. By paying special attention to the heterogeneity among different earnings and income groups, we document that individuals at the top of the distribution are more cyclical than lower ones. Moreover, the estimated cyclicality is considerably higher in recessions than in expansions for top-incomes. We also show that real wages and income are roughly a cyclical for low wage and income workers. Instead, their adjustment to the cycle takes place through transitions to and from unemployment.
Keywords: Real wage, cyclicality, heterogeneity, income distribution
JEL Classification: E24, E32, J31
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