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Wage Adjustment in the Great Recession

Michael Elsby, Donggyun Shin and Gary Solon

No 19478, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Using 1979-2011 Current Population Survey data for the United States and 1975-2011 New Earnings Survey data for Great Britain, we study wage behavior in both countries, with particular attention to the Great Recession. Real wages are procyclical in both countries, but the procyclicality of real wages varies across recessions, and does so differently between the two countries. U.S. distributions of year-to-year nominal wage change show many workers reporting zero change (suggesting wage stickiness) and many reporting nominal reductions (suggesting wage flexibility), but both findings could be distorted by reporting error. The British data, which are based on employers' payroll records, show much lower prevalence of zero wage change, but still show surprisingly frequent nominal wage cuts. The complex constellation of empirical regularities defies explanation by simple theories.

JEL-codes: E24 E32 J3 J64 (search for similar items in EconPapers)
Date: 2013-09
New Economics Papers: this item is included in nep-hme, nep-lab, nep-lma and nep-mac
Note: EFG LS ME
References: Add references at CitEc
Citations: View citations in EconPapers (14)

Published as Wage Adjustment in the Great Recession and Other Downturns: Evidence from the United States and Great Britain , Michael W. L. Elsby, Donggyun Shin, Gary Solon. in Labor Markets in the Aftermath of the Great Recession , Card and Mas. 2016

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