The Cyclicality of Effective Wages Within Employer-Employee Matches: Evidence from German Panel Data
39 Pages Posted: 29 Jul 2007
Date Written: July 2007
Abstract
Using individual based micro-data from the German Socio-Economic Panel Study (SOEP), I analyze the cyclicality of real wages for male workers within employer-employee matches over the period 1984-2004, and compare different wage measures: the standard hourly wage rate, hourly wage earnings including overtime and bonus payments, and the effective wage, which takes into account not only paid overtime, but also unpaid working hours. None of the hourly wage measures is shown to exhibit cyclicality except for the group of salaried workers with unpaid overtime. Their effective wages react strongly to changes in unemployment in a procyclical way. Despite acyclical wage rates, salaried workers without unpaid hours but with income from extra payments, such as bonuses, experienced procyclical earnings movements. Monthly earnings were also procyclical for hourly paid workers who received overtime payments. The procyclicality of earnings revealed for Germany is of comparable size with the one in the U.S..
Keywords: wage cyclicality, effective wages, unpaid overtime, bonus payments, firm stayers
JEL Classification: E32, J31
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Measuring the Cyclicality of Real Wages: How Important is Composition Bias
By Gary Solon, Robert Barsky, ...
-
Real Wages Over the Business Cycle
By Robert Barsky and Gary Solon
-
Real Wage Cyclicality of Job Stayers, Within-Company Job Movers, and Between-Company Job Movers
By Paul J. Devereux and Robert A. Hart
-
New Evidence on Real Wage Cyclicality within Employer-Employee Matches
By Donggyun Shin and Gary Solon
-
The Spot Market Matters: Evidence on Implicit Contracts from Britain
By Paul J. Devereux and Robert A. Hart
-
Why are the Wages of Job Stayers Procyclical?
By Donggyun Shin and Kwanho Shin