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Cyclicality of real wages and adjustment costs

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  • Bruno Chiarini

Abstract

This paper tackles the issue of the procyclicality of the real wage. We present a dynamic relationship between real wages and employment consistent with the long-run stationary equilibrium using a cointegrated VAR model. We find that wages are anticyclical and that a negative relationship between real wages and employment is necessary to achieve an economically identifiable stationary long run solution. The contentiousness of the topic does not appear so important once we recall some measurement issues and economic features of the Italian labour market.

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  • Bruno Chiarini, 1998. "Cyclicality of real wages and adjustment costs," Applied Economics, Taylor & Francis Journals, vol. 30(9), pages 1239-1250.
    • Handle: RePEc:taf:applec:v:30:y:1998:i:9:p:1239-1250
    DOI: 10.1080/000368498325129
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    1. Marco Guerrazzi & Pier Giuseppe Giribone, 2022. "The dynamics of working hours and wages under implicit contracts," Bulletin of Economic Research, Wiley Blackwell, vol. 74(4), pages 1075-1094, October.
    2. Nicholas Apergis & Alexandros Panethimitakis, 2011. "Stylised facts of Greek business cycles: new evidence from aggregate and across regimes data," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 3(2), pages 147-165.

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