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Wages and unemployment across business cycles: a high-frequency investigation

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  • Lei Fang
  • Pedro Silos

Abstract

This paper investigates the change in wages associated with a spell of unemployment. The novelty lies in using monthly data from the Survey of Income and Program Participation (SIPP) to analyze the dynamics of those wage changes across different business cycles. The level of education or the sector of re-employment affects the change in wages following an unemployment spell differently across different downturns. The degree of wage rigidity varies across recessions; wage changes pre- and post-unemployment are sometimes procyclical and sometimes countercyclical. These results may be useful for understanding the different aggregate employment dynamics observed across downturns and recoveries.

Suggested Citation

  • Lei Fang & Pedro Silos, 2012. "Wages and unemployment across business cycles: a high-frequency investigation," FRB Atlanta Working Paper 2012-16, Federal Reserve Bank of Atlanta.
    • Handle: RePEc:fip:fedawp:2012-16
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    File URL: http://www.frbatlanta.org/documents/pubs/wp/wp1216.pdf
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    References listed on IDEAS

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