Exchange Rates and Wages

32 Pages Posted: 26 Feb 2001 Last revised: 21 Oct 2010

See all articles by Linda S. Goldberg

Linda S. Goldberg

Federal Reserve Bank of New York; National Bureau of Economic Research (NBER)

Joseph S. Tracy

Federal Reserve Bank of New York; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: February 2001

Abstract

The effects of exchange rate fluctuations across the population is an important issue for increasingly globalized economies. Previous studies using industry aggregate data have found differences across industries in the labor market implications of exchange rates, reporting that industry wages are significantly more responsive than industry employment. We offer an explanation for this paradoxical finding. Using Current Population Survey data for 1976 through 1998, we document that the main mechanism for exchange rate effects on wages occurs through job turnover and the strong consequences this has for the wages of workers undergoing such job transitions. By contrast, workers who remain with the same employer experience little if any wage impacts from exchange rate shocks. In addition, we find that the least educated workers who also have the most frequent job changes shoulder the largest adjustments to exchange rates.

Suggested Citation

Goldberg, Linda S. and Tracy, Joseph, Exchange Rates and Wages (February 2001). NBER Working Paper No. w8137. Available at SSRN: https://ssrn.com/abstract=261262

Linda S. Goldberg (Contact Author)

Federal Reserve Bank of New York ( email )

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Joseph Tracy

Federal Reserve Bank of New York ( email )

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United States
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212-720-2630 (Fax)

National Bureau of Economic Research (NBER) ( email )

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United States

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