The Cyclicality of Effective Wages Within Employer-Employee Matches: Evidence from German Panel Data

39 Pages Posted: 29 Jul 2007

See all articles by Silke Anger

Silke Anger

German Institute for Economic Research (DIW Berlin); Government of the Federal Republic of Germany - Institute for Employment Research (IAB)

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

Anger, Silke and Anger, Silke, The Cyclicality of Effective Wages Within Employer-Employee Matches: Evidence from German Panel Data (July 2007). ECB Working Paper No. 783, SOEPpaper, No. 34, Available at SSRN: https://ssrn.com/abstract=999535 or http://dx.doi.org/10.2139/ssrn.999535

Silke Anger (Contact Author)

Government of the Federal Republic of Germany - Institute for Employment Research (IAB) ( email )

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Nuremberg, 90478
Germany

German Institute for Economic Research (DIW Berlin) ( email )

German Socio-Economic Panel Study (SOEP)
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Berlin, 10117
Germany
+49 30 89789-526 (Phone)
+49 30 89789-109 (Fax)

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