[go: up one dir, main page]
More Web Proxy on the site http://driver.im/
IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/98240.html
   My bibliography  Save this paper

Wage Cyclicality Revisited: The Role of Hiring Standards

Author

Listed:
  • Choi, Sekyu
  • Figueroa, Nincen
  • Villena-Roldán, Benjamin
Abstract
In this paper we analyze cyclicality of wages at the job level, using posted wage data from an online job board in an emerging economy. Our data contains a significant fraction of online job advertisements in the Chilean economy for the period 2009 to 2018 and is representative of the overall wage distribution of newly hired workers. One major advantage of our dataset is the availability of wage information along information on requirements for each job. We find significant levels of posted wage procyclicality, safely ignoring any cyclical mismatch. We show how omitted variable bias, by ignoring countercyclical changes in hiring standards, reduces the amount of cyclicality found in previous studies.

Suggested Citation

  • Choi, Sekyu & Figueroa, Nincen & Villena-Roldán, Benjamin, 2020. "Wage Cyclicality Revisited: The Role of Hiring Standards," MPRA Paper 98240, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:98240
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/98240/1/MPRA_paper_98240.pdf
    File Function: original version
    Download Restriction: no

    File URL: https://mpra.ub.uni-muenchen.de/98528/1/MPRA_paper_98528.pdf
    File Function: revised version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Vera Brenčič, 2012. "Wage posting: evidence from job ads," Canadian Journal of Economics, Canadian Economics Association, vol. 45(4), pages 1529-1559, November.
    2. DiNardo, John & Fortin, Nicole M & Lemieux, Thomas, 1996. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Econometrica, Econometric Society, vol. 64(5), pages 1001-1044, September.
    3. repec:wyi:journl:002164 is not listed on IDEAS
    4. Jonah B. Gelbach, 2016. "When Do Covariates Matter? And Which Ones, and How Much?," Journal of Labor Economics, University of Chicago Press, vol. 34(2), pages 509-543.
    5. Mark Gertler & Christopher Huckfeldt & Antonella Trigari, 2020. "Unemployment Fluctuations, Match Quality, and the Wage Cyclicality of New Hires," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 87(4), pages 1876-1914.
    6. Costain, James S. & Reiter, Michael, 2008. "Business cycles, unemployment insurance, and the calibration of matching models," Journal of Economic Dynamics and Control, Elsevier, vol. 32(4), pages 1120-1155, April.
    7. M. W. Reder, 1964. "Wage Structure and Structural Unemployment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 31(4), pages 309-322.
    8. Mark Gertler & Antonella Trigari, 2009. "Unemployment Fluctuations with Staggered Nash Wage Bargaining," Journal of Political Economy, University of Chicago Press, vol. 117(1), pages 38-86, February.
    9. John Grigsby & Erik Hurst & Ahu Yildirmaz, 2021. "Aggregate Nominal Wage Adjustments: New Evidence from Administrative Payroll Data," American Economic Review, American Economic Association, vol. 111(2), pages 428-471, February.
    10. Ioana Marinescu & Ronald Wolthoff, 2020. "Opening the Black Box of the Matching Function: The Power of Words," Journal of Labor Economics, University of Chicago Press, vol. 38(2), pages 535-568.
    11. Robert Shimer, 2010. "Labor Markets and Business Cycles," Economics Books, Princeton University Press, edition 1, number 9217.
    12. Schaefer, Daniel & Singleton, Carl, 2019. "Cyclical labor costs within jobs," European Economic Review, Elsevier, vol. 120(C).
    13. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, April.
    14. Haefke, Christian & Sonntag, Marcus & van Rens, Thijs, 2013. "Wage rigidity and job creation," Journal of Monetary Economics, Elsevier, vol. 60(8), pages 887-899.
    15. Philip Oreopoulos & Till von Wachter & Andrew Heisz, 2012. "The Short- and Long-Term Career Effects of Graduating in a Recession," American Economic Journal: Applied Economics, American Economic Association, vol. 4(1), pages 1-29, January.
    16. Haggstrom, Gus W, 1983. "Logistic Regression and Discriminant Analysis by Ordinary Least Squares," Journal of Business & Economic Statistics, American Statistical Association, vol. 1(3), pages 229-238, July.
    17. Christopher A. Pissarides, 2009. "The Unemployment Volatility Puzzle: Is Wage Stickiness the Answer?," Econometrica, Econometric Society, vol. 77(5), pages 1339-1369, September.
    18. Hahn, Joyce K. & Hyatt, Henry R. & Janicki, Hubert P., 2021. "Job ladders and growth in earnings, hours, and wages," European Economic Review, Elsevier, vol. 133(C).
    19. Anabela Carneiro & Paulo Guimarães & Pedro Portugal, 2012. "Real Wages and the Business Cycle: Accounting for Worker, Firm, and Job Title Heterogeneity," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(2), pages 133-152, April.
    20. Marcus Hagedorn & Iourii Manovskii, 2008. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies Revisited," American Economic Review, American Economic Association, vol. 98(4), pages 1692-1706, September.
    21. Eugenia Andreasen & Patricio Valenzuela, 2018. "Investment Opportunities and Corporate Credit Risk," Documentos de Trabajo 336, Centro de Economía Aplicada, Universidad de Chile.
    22. Galindev, Ragchaasuren & Lkhagvasuren, Damba, 2010. "Discretization of highly persistent correlated AR(1) shocks," Journal of Economic Dynamics and Control, Elsevier, vol. 34(7), pages 1260-1276, July.
    23. Robert Shimer, 2005. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies," American Economic Review, American Economic Association, vol. 95(1), pages 25-49, March.
    24. Modestino, Alicia Sasser & Shoag, Daniel & Ballance, Joshua, 2016. "Downskilling: changes in employer skill requirements over the business cycle," Labour Economics, Elsevier, vol. 41(C), pages 333-347.
    25. Juan Guerra-Salas & Markus Kirchner & Rodrigo Tranamil, 2021. "Search Frictions and the Business Cycle in a Small Open Economy DSGE Model," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 39, pages 258-279, January.
    26. Stefano Banfi & Benjamin Villena-Roldan & Sekyu Choi, 2018. "Deconstructing job search behavior," 2018 Meeting Papers 368, Society for Economic Dynamics.
    27. Eric T. Swanson, 2007. "Real Wage Cyclicality In The Panel Study Of Income Dynamics," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(5), pages 617-647, November.
    28. Bowlus, Audra J, 1995. "Matching Workers and Jobs: Cyclical Fluctuations in Match Quality," Journal of Labor Economics, University of Chicago Press, vol. 13(2), pages 335-350, April.
    29. Gary Solon & Robert Barsky & Jonathan A. Parker, 1994. "Measuring the Cyclicality of Real Wages: How Important is Composition Bias?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(1), pages 1-25.
    30. Stefano Banfi & Benjamín Villena-Roldán, 2019. "Do High-Wage Jobs Attract More Applicants? Directed Search Evidence from the Online Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 37(3), pages 715-746.
    31. Andolfatto, David, 1996. "Business Cycles and Labor-Market Search," American Economic Review, American Economic Association, vol. 86(1), pages 112-132, March.
    32. Mortensen, Dale & Pissarides, Christopher, 2011. "Job Creation and Job Destruction in the Theory of Unemployment," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 1-19.
    33. Robert E. Hall, 2005. "Employment Fluctuations with Equilibrium Wage Stickiness," American Economic Review, American Economic Association, vol. 95(1), pages 50-65, March.
    34. Peter Kuhn & Kailing Shen, 2013. "Gender Discrimination in Job Ads: Evidence from China," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(1), pages 287-336.
    35. Andriana Bellou & Bariş Kaymak, 2021. "The Cyclical Behavior of Job Quality and Real Wage Growth," American Economic Review: Insights, American Economic Association, vol. 3(1), pages 83-96, March.
    36. Sedláček, Petr, 2014. "Match efficiency and firms' hiring standards," Journal of Monetary Economics, Elsevier, vol. 62(C), pages 123-133.
    37. Bjorn Dapi, 2020. "Wage Cyclicality and Composition Bias in the Norwegian Economy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 122(4), pages 1403-1430, October.
    38. Heiko Stüber, 2017. "The Real Wage Cyclicality of Newly Hired and Incumbent Workers in Germany," Economic Journal, Royal Economic Society, vol. 127(600), pages 522-546, March.
    39. Bils, Mark J, 1985. "Real Wages over the Business Cycle: Evidence from Panel Data," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 666-689, August.
    40. Pedro S. Martins & Gary Solon & Jonathan P. Thomas, 2012. "Measuring What Employers Do about Entry Wages over the Business Cycle: A New Approach," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(4), pages 36-55, October.
    41. Ismail Baydur & Toshihiko Mukoyama, 2020. "Job Duration and Match Characteristics over the Business Cycle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 37, pages 33-53, July.
    42. Alicia Sasser Modestino & Daniel Shoag & Joshua Ballance, 2020. "Upskilling: Do Employers Demand Greater Skill When Workers Are Plentiful?," The Review of Economics and Statistics, MIT Press, vol. 102(4), pages 793-805, October.
    43. McGregor, Alan, 1978. "Unemployment Duration and Re-Employment Probability," Economic Journal, Royal Economic Society, vol. 88(352), pages 693-706, December.
    44. Lars Ljungqvist & Thomas J. Sargent, 2017. "The Fundamental Surplus," American Economic Review, American Economic Association, vol. 107(9), pages 2630-2665, September.
    45. Faryna, Oleksandr & Pham, Tho & Talavera, Oleksandr & Tsapin, Andriy, 2022. "Wage and unemployment: Evidence from online job vacancy data," Journal of Comparative Economics, Elsevier, vol. 50(1), pages 52-70.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Honey Batra & Amanda M. Michaud & Simon Mongey, 2023. "Online Job Posts Contain Very Little Wage Information," Opportunity and Inclusive Growth Institute Working Papers 083, Federal Reserve Bank of Minneapolis.
    2. Suguru Otani, 2024. "Nonparametric Estimation of Matching Efficiency and Elasticity on a Private On-the-Job Search Platform: Evidence from Japan, 2014-2024," Papers 2410.17011, arXiv.org.
    3. Jonathon Hazell & Bledi Taska, 2020. "Downward Rigidity in the Wage for New Hires," Discussion Papers 2028, Centre for Macroeconomics (CFM).
    4. Alexey Gorn, "undated". "Passive Search and Jobless Recoveries," Working Papers 202113, University of Liverpool, Department of Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jonathon Hazell & Bledi Taska, 2020. "Downward Rigidity in the Wage for New Hires," Discussion Papers 2028, Centre for Macroeconomics (CFM).
    2. Matthew Knowles & Mario Lupoli, 2023. "The Nash Wage Elasticity and its Business Cycle Implications," ECONtribute Discussion Papers Series 240, University of Bonn and University of Cologne, Germany.
    3. Kudlyak, Marianna, 2014. "The cyclicality of the user cost of labor," Journal of Monetary Economics, Elsevier, vol. 68(C), pages 53-67.
    4. Bauer, Anja & Lochner, Benjamin, 2020. "History dependence in wages and cyclical selection: Evidence from Germany," Labour Economics, Elsevier, vol. 67(C).
    5. Merkl, Christian & Stüber, Heiko, 2024. "Wage and employment cyclicalities at the establishment level," European Economic Review, Elsevier, vol. 161(C).
    6. Barrela, Rodrigo & Costa, Eduardo & Portugal, Pedro, 2024. "On the Asymmetrical Sensitivity of the Distribution of Real Wages to Business Cycle Fluctuations," IZA Discussion Papers 16911, Institute of Labor Economics (IZA).
    7. Leena Rudanko, 2008. "Aggregate and Idiosyncratic Risk in a Frictional Labor Market," Boston University - Department of Economics - Working Papers Series wp2008-009, Boston University - Department of Economics.
    8. Lydon, Reamonn & Lozej, Matija, 2018. "Flexibility of new hires’ earnings in Ireland," Labour Economics, Elsevier, vol. 53(C), pages 112-127.
    9. F. Di Pace & K. Mitra & S. Zhang, 2021. "Adaptive Learning and Labor Market Dynamics," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 53(2-3), pages 441-475, March.
    10. Pereira, João & Ramos, Raul & Martins, Pedro S., 2024. "Wage Cyclicality and Labour Market Institutions," IZA Discussion Papers 16787, Institute of Labor Economics (IZA).
    11. Rogerson, Richard & Shimer, Robert, 2011. "Search in Macroeconomic Models of the Labor Market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 7, pages Pages: 61, Elsevier.
    12. Simon Jäger & Benjamin Schoefer & Samuel Young & Josef Zweimüller, 2020. "Wages and the Value of Nonemployment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(4), pages 1905-1963.
    13. Merkl, Christian & Stüber, Heiko, 2016. "Wage cyclicalities and labor market dynamics at the establishment level: Theory and evidence," FAU Discussion Papers in Economics 12/2016, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    14. Di Pace, Federico & Villa, Stefania, 2016. "Factor complementarity and labour market dynamics," European Economic Review, Elsevier, vol. 82(C), pages 70-112.
    15. Tortorice, Daniel L., 2013. "Endogenous separation, wage rigidity and the dynamics of unemployment," Journal of Macroeconomics, Elsevier, vol. 38(PB), pages 179-191.
    16. Alejandro Justiniano & Claudio Michelacci, 2012. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies in the United States and Europe," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 8(1), pages 169-235.
    17. Haefke, Christian & Sonntag, Marcus & van Rens, Thijs, 2013. "Wage rigidity and job creation," Journal of Monetary Economics, Elsevier, vol. 60(8), pages 887-899.
    18. Tsasa, Jean-Paul K., 2022. "Labor market volatility in a fully specified RBC search model: An analytical investigation," Journal of Mathematical Economics, Elsevier, vol. 103(C).
    19. Snell, Andy & Stüber, Heiko & Thomas, Jonathan P., 2024. "Job security, asymmetric information, and wage rigidity," European Economic Review, Elsevier, vol. 161(C).
    20. F. Di Pace & K. Mitra & S. Zhang, 2021. "Adaptive Learning and Labor Market Dynamics," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 53(2-3), pages 441-475, March.

    More about this item

    Keywords

    Wage cyclicality; online job boards; composition bias; hiring standards;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J4 - Labor and Demographic Economics - - Particular Labor Markets
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:98240. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.