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Spatial Dynamics And Heterogeneity In The Cyclicality Of Real Wages

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  • James P. Ziliak
  • Beth A. Wilson
  • Joe A. Stone

Abstract

Neither the issue of how local and aggregate labor markets interact over time-nor the issue of how heterogeneity by education, race, and other factors interacts with these spatial dynamics-has previously been explored in the literature on the cyclicality of real wages. This study investigates how real wages respond to local and aggregate unemployment rates over time, and explores possible heterogeneities in the responses. Results, based upon data from the Panel Study of Income Dynamics, indicate that real wages move procyclically with both aggregate and local markets, but that the response to local changes occurs with a lag; that rates of return to education are procyclical overall for aggregate labor markets, but tend to be countercyclical for blacks; and that wages of union, manufacturing, blue-collar, and black workers tend to be less procyclical, even countercyclical for black college graduates. Overall, we find substantial spatial dynamics and heterogeneity in the cyclicality of real wages. © 1999 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

Suggested Citation

  • James P. Ziliak & Beth A. Wilson & Joe A. Stone, 1999. "Spatial Dynamics And Heterogeneity In The Cyclicality Of Real Wages," The Review of Economics and Statistics, MIT Press, vol. 81(2), pages 227-236, May.
    • Handle: RePEc:tpr:restat:v:81:y:1999:i:2:p:227-236
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    Cited by:

    1. Raven E. Saks & Abigail Wozniak, 2011. "Labor Reallocation over the Business Cycle: New Evidence from Internal Migration," Journal of Labor Economics, University of Chicago Press, vol. 29(4), pages 697-739.
    2. Richard Blundell & James P. Ziliak & Hugo Lopez, 2023. "Labour market inequality and the changing life cycle profile of male and female wages," IFS Working Papers W23/16, Institute for Fiscal Studies.
    3. Matthew J. Lindquist, 2004. "Capital-Skill Complementarity and Inequality Over the Business Cycle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(3), pages 519-540, July.
    4. James P. Ziliak & David N. Figlio, 2000. "Geographic Differences in AFDC and Food Stamp Caseloads in the Welfare Reform Era," JCPR Working Papers 180, Northwestern University/University of Chicago Joint Center for Poverty Research.
    5. Sherif Khalifa, 2009. "Heterogeneous Workers and Occupations: Inequality, Unemployment, and Crowding Out," Southern Economic Journal, John Wiley & Sons, vol. 75(4), pages 1141-1164, April.
    6. Carlén, Björn, 2002. "Exclusionary Manipulation of Carbon Permit Markets: A Laboratory Test," Research Papers in Economics 2002:15, Stockholm University, Department of Economics.
    7. Hermann Gartner & Thorsten Schank & Claus Schnabel, 2013. "Wage Cyclicality Under Different Regimes of Industrial Relations," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 52(2), pages 516-540, April.
    8. Verdugo, Gregory, 2016. "Real wage cyclicality in the Eurozone before and during the Great Recession: Evidence from micro data," European Economic Review, Elsevier, vol. 82(C), pages 46-69.
    9. Otrok Christopher & Pourpourides Panayiotis M., 2019. "On the cyclicality of real wages and wage differentials," The B.E. Journal of Macroeconomics, De Gruyter, vol. 19(1), pages 1-18, January.
    10. Théophile AZOMAHOU, 1999. "Estimation of Spatial Panel Data Models Using a Minimum Distance Estimator: Application," Working Papers of BETA 9912, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    11. Pedro Portugal & Anabela Carneiro, 2004. "Workers' Flows and Real Wage Cyclicality," Working Papers w200409, Banco de Portugal, Economics and Research Department.
    12. Lederman, Daniel & Rojas, Diego, 2014. "Export shocks and the volatility of returns to schooling : evidence from twelve Latin American economies," Policy Research Working Paper Series 7144, The World Bank.
    13. James Thornton, 2011. "Does more medical care improve population health? New evidence for an old controversy," Applied Economics, Taylor & Francis Journals, vol. 43(24), pages 3325-3336.
    14. Théophile Azomahou, 2008. "Minimum distance estimation of the spatial panel autoregressive model," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 2(1), pages 49-83, April.
    15. Campbell III, Carl M., 2008. "An efficiency wage approach to reconciling the wage curve and the Phillips curve," Labour Economics, Elsevier, vol. 15(6), pages 1388-1415, December.
    16. Ofer Malamud & Abigail K. Wozniak, 2010. "The Impact of College Education on Geographic Mobility: Identifying Education Using Multiple Components of Vietnam Draft Risk," NBER Working Papers 16463, National Bureau of Economic Research, Inc.
    17. 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).
    18. Xin Xu & Robert Kaestner, 2010. "The Business Cycle and Health Behaviors," NBER Working Papers 15737, National Bureau of Economic Research, Inc.
    19. Ofer Malamud & Abigail Wozniak, 2012. "The Impact of College on Migration: Evidence from the Vietnam Generation," Journal of Human Resources, University of Wisconsin Press, vol. 47(4), pages 913-950.
    20. Wozniak, Abigail, 2006. "Educational Differences in the Migration Responses of Young Workers to Local Labor Market Conditions," IZA Discussion Papers 1954, Institute of Labor Economics (IZA).
    21. Xu, Xin, 2013. "The business cycle and health behaviors," Social Science & Medicine, Elsevier, vol. 77(C), pages 126-136.
    22. J. Paul Elhorst & Uwe Blien & Katja Wolf, 2007. "New Evidence on the Wage Curve," International Regional Science Review, , vol. 30(2), pages 173-191, April.

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