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What We Know About Wage Adjustment During the 2007-09 Recession and Its Aftermath

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  • Marianna Kudlyak

Abstract

Aggregate wage growth has remained flat during the 2007-09 recession and its aftermath while unemployment has exhibited substantial swings. Does the low real aggregate wage growth during the recovery indicate a weak labor market beyond what is measured by the official unemployment rate? Aggregate wage growth reflects actual changes of workers' wages, changes in the composition of workers, and changes in the composition of jobs. Some of these changes are related to underlying structural trends in the economy while others constitute the economy's response to the business cycle shocks and are more indicative of cyclical resource utilization in the labor market. Consequently, it is important to look beyond the aggregate statistics to understand the behavior of real wages and its relation to the health of the labor market. In this article, we review recent literature that studies the changes in the components of the aggregate wage over time and, specifically, after the 2007-09 recession.

Suggested Citation

  • Marianna Kudlyak, 2015. "What We Know About Wage Adjustment During the 2007-09 Recession and Its Aftermath," Economic Quarterly, Federal Reserve Bank of Richmond, issue 3Q, pages 225-244.
    • Handle: RePEc:fip:fedreq:00037
    DOI: 10.21144/eq1010302
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    References listed on IDEAS

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    Cited by:

    1. Oleksandr Faryna & Tho Pham & Oleksandr Talavera & Andriy Tsapin, 2020. "Wage Setting and Unemployment: Evidence from Online Job Vacancy Data," Economics Discussion Papers em-dp2020-02, Department of Economics, University of Reading.
    2. Caglayan, Mustafa & Talavera, Oleksandr & Xiong, Lin, 2022. "Female small business owners in China: Discouraged, not discriminated," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 80(C).
    3. 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.

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