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A cross‐country comparison of the cyclicality of real wages

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  • Haoming Liu

Abstract

. This paper contains the first cross‐country comparison of the cyclical behaviour of real wages using microdata. After controlling for changes in labour quality, I find that real wages are strongly procyclical in Canada, the United Kingdom, and the United States. In contrast, the cyclicality of government‐published real aggregate hourly wages varies substantially across these three countries. The disparity suggests that a direct comparison of the cyclical behaviour of real aggregate wages is misleading. Finally, I show that variations in labour quality also bias the cross‐country correlation of several key labour market variables. JEL classification: J3, E3 Une comparaison transversale entre pays du caractère cyclique des salaires réels. Ce mémoire présente la première comparaison entre pays du comportement cyclique des salaires réels à l’aide de micro‐données. Après normalisation pour tenir compte des changements dans la qualité du travail, cette étude montre que les salaires réels sont pro‐cycliques au Canada, au Royaume‐Uni et aux Etats Unis. Au contraire, le caractère cyclique des données sur les salaires horaires agrégés varie substantiellement entre ces trois pays. Cette disparité suggère qu’une comparaison directe du comportement cyclique des salaires réels agrégés peut être trompeuse. Finalement, cette étude montre que les variations dans la qualité du travail biaisent aussi les corrélations entre pays de plusieurs variables du marché du travail.

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  • Haoming Liu, 2003. "A cross‐country comparison of the cyclicality of real wages," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 36(4), pages 923-948, November.
    • Handle: RePEc:wly:canjec:v:36:y:2003:i:4:p:923-948
    DOI: 10.1111/1540-5982.t01-3-00007
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    2. Michael W. L. Elsby & Donggyun Shin & Gary Solon, 2016. "Wage Adjustment in the Great Recession and Other Downturns: Evidence from the United States and Great Britain," Journal of Labor Economics, University of Chicago Press, vol. 34(S1), pages 249-291.
    3. Chandranath Amarasekara & George J. Bratsiotis, 2012. "Monetary policy and real wage cyclicality," Applied Economics, Taylor & Francis Journals, vol. 44(33), pages 4391-4408, November.
    4. Seonyoung Park & Donggyun Shin, 2019. "Inflation And Wage Rigidity/Flexibility In The Short Run," Economic Inquiry, Western Economic Association International, vol. 57(3), pages 1675-1697, July.
    5. Ulrich Woitek, 2004. "Real Wages and Business Cycle Asymmetries," CESifo Working Paper Series 1206, CESifo.
    6. Xin Xu & Robert Kaestner, 2010. "The Business Cycle and Health Behaviors," NBER Working Papers 15737, National Bureau of Economic Research, Inc.
    7. Xu, Xin, 2013. "The business cycle and health behaviors," Social Science & Medicine, Elsevier, vol. 77(C), pages 126-136.
    8. Seonyoung Park & Donggyun Shin, 2019. "Inflation And Wage Rigidity/Flexibility In The Short Run," Economic Inquiry, Western Economic Association International, vol. 57(3), pages 1675-1697, July.

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    More about this item

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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