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Real wage cyclicality in the PSID

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  • Eric T. Swanson

Abstract

Previous studies of real wage cyclicality have made only sparing use of the microdata detail that is available in the Panel Study of Income Dynamics (PSID). The present paper brings to bear this additional detail to investigate the robustness of previous results and to examine whether there are important cross-sectional and demographic differences in wage cyclicality. Although real wages were procyclical across the entire distribution of workers from 1967 to 1991, the wages of lower-income, younger, and less-educated workers exhibited greater procyclicality. However, workers' straight-time hourly pay rates have been acyclical, suggesting that more variable pay margins such as bonuses, overtime, late shift premia, and commissions have played a substantial if not primary role in generating procyclicality.

Suggested Citation

  • Eric T. Swanson, 2007. "Real wage cyclicality in the PSID," Working Paper Series 2007-15, Federal Reserve Bank of San Francisco.
    • Handle: RePEc:fip:fedfwp:2007-15
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    Cited by:

    1. Ouyang, Min, 2009. "The scarring effect of recessions," Journal of Monetary Economics, Elsevier, vol. 56(2), pages 184-199, March.
    2. María Cervini-Plá & Antonia López-Villavicencio & José Ignacio Silva, 2015. "The heterogeneous cyclicality of income and wages among the distribution," Working Papers halshs-01133823, HAL.
    3. Pedro S. Martins, 2007. "Heterogeneity In Real Wage Cyclicality," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(5), pages 684-698, November.
    4. Dany Brouillette & Olena Kostyshyna & Natalia Kyui, 2018. "Downward nominal wage rigidity in Canada: Evidence from micro-level data," Canadian Journal of Economics, Canadian Economics Association, vol. 51(3), pages 968-1002, August.
    5. Jinpeng MA, 2009. "Jobless Recovery, Idle Productivity, and the Role of Capital," EcoMod2009 21500060, EcoMod.

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    Keywords

    Wages; Labor market;

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