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Wage Growth over Unemployment Spells

Author

Listed:
  • Lei Fang
  • Pedro Silos

Abstract

This article looks at the wage growth associated with a spell of unemployment during the past three recessions. Our main findings are threefold. First, half of all unemployed workers experience a lower hourly wage once they regain employment. Second, after an unemployment spell, older workers and those without a college degree experience lower wage rowth. Third, workers who regain employment in a different industry than they were in previously tend to experience a substantial wage decline. The analysis suggests that the COVID-19 pandemic not only led to unprecedented job losses, but it could also result in sizable wage losses for a large fraction of unemployed workers as they return to employment.

Suggested Citation

  • Lei Fang & Pedro Silos, 2020. "Wage Growth over Unemployment Spells," Policy Hub, Federal Reserve Bank of Atlanta, vol. 2020(9), pages 1-7, July.
    • Handle: RePEc:fip:a00068:99141
    DOI: 10.29338/ph2020-09
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    More about this item

    Keywords

    wage growth; unemployment spell; recession; industry switching;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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