Real Wage Cyclicality in Germany and the UK: New Results Using Panel Data

16 Pages Posted: 18 Apr 2007

See all articles by Fei Peng

Fei Peng

University of Birmingham

Stanley Siebert

Business School, University of Birmingham; IZA Institute of Labor Economics; Institute of Economic Affairs (IEA)

Date Written: March 2007


This paper compares the cyclical behaviour of male real wages in Germany and the UK using the German Socio-Economic Panel 1984-2002 and the British Household Panel Survey 1991-2004. We distinguish between job stayers (remaining in the same job), and within- and between-company job movers. Stayers are the large majority in both countries. Using changes in the unemployment rate as the cyclical measure, we find real wages of stayers in the private sector in West Germany - but not East Germany - to be procyclical, and quite sensitive to unemployment, comparable to the US and the UK. We find cyclicality in the public sector in neither country. Thus real wage flexibility is similar in the two countries, apart from East Germany, despite apparent differences in wage-setting institutions.

Keywords: real wage cyclicality, job stayers, Germany, United Kingdom, GSOEP, BHPS

JEL Classification: E32, J31, K31

Suggested Citation

Peng, Fei and Siebert, Stanley, Real Wage Cyclicality in Germany and the UK: New Results Using Panel Data (March 2007). IZA Discussion Paper No. 2688, Available at SSRN:

Fei Peng

University of Birmingham ( email )

Edgbaston, Birmingham B15 2TT
United Kingdom

Stanley Siebert (Contact Author)

Business School, University of Birmingham ( email )

Birmingham, B15 2TT
United Kingdom
(44) 1214146698 (Phone)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072

Institute of Economic Affairs (IEA) ( email )

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