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What Can We Learn from Asynchronous Wage Changes?

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Abstract

I document eight novel facts about wage changes and provide a theoretical framework to rationalize them. I then illustrate how this new treatment of data and theoretical framework speak to important secular and cyclical features of the macroeconomy. The evidence put forth in this paper, suggests that a theory of wage setting in which wages respond to idiosyncratic competition is an important complement to the more conventional macroeconomic view in which wage rigidity is induced by deliberately divorcing the timing of wage changes from innovations in firms' and workers' opportunities.

Suggested Citation

  • Cynthia L. Doniger, 2021. "What Can We Learn from Asynchronous Wage Changes?," Finance and Economics Discussion Series 2021-055r1, Board of Governors of the Federal Reserve System (U.S.), revised 31 Mar 2022.
    • Handle: RePEc:fip:fedgfe:2021-55
    DOI: 10.17016/FEDS.2021.055r1
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    More about this item

    Keywords

    Labor Contracts; Wage Changes; Job Ladder;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • M55 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Contracting Devices

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