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The Illusion of Cyclicality in Entry Wages

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  • Black, Ines
  • Figueiredo, Ana

Abstract

We show that occupation mobility creates the illusion of cyclical hiring wages. Using administrative data, we find that wages of new hires who remain in the same occupation are no more cyclical than those of existing workers, whereas wages of occupation switchers are highly cyclical. We uncover higher wage cyclicality also among workers who switch occupations within the same firm. Moreover, wage cyclicality increases, the more different current and previous occupations’ required skills. Our results suggest that the widely documented cyclicality of entry wages reflects composition effects due to changes in match quality in worker’s occupation, rather than wage flexibility.

Suggested Citation

  • Black, Ines & Figueiredo, Ana, 2024. "The Illusion of Cyclicality in Entry Wages," CEPR Discussion Papers 19430, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:19430
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    More about this item

    Keywords

    wage cyclicality; Occupation mobility;

    JEL classification:

    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • 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
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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