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Revisiting the Relationship Between Unemployment and Wages

Author

Listed:
  • Joao Alfredo Galindo da Fonseca

    (University of British Columbia, Vancouver School of Economics)

  • Giovanni Gallipoli

    (University of British Columbia)

  • Yaniv Yedid-Levi

    (University of British Columbia, Vancouver School of Economics)

Abstract

We revisit the empirical relationship between wages and labor market conditions. Following work histories in the NLSY79 we document that the relationship between wages and unemployment rate differs across occupations. The results hold after controlling for unobserved match quality. This suggests that evidence about history-dependence of wages obtained from pooled samples conceals significant differences and may provide an imprecise description of earning dynamics. Similar discrepancies emerge when we group workers by education. Sensitivity of wages to unemployment appears related to whether total remuneration entails performance pay components.

Suggested Citation

  • Joao Alfredo Galindo da Fonseca & Giovanni Gallipoli & Yaniv Yedid-Levi, 2016. "Revisiting the Relationship Between Unemployment and Wages," Working Papers 2016-001, Human Capital and Economic Opportunity Working Group.
    • Handle: RePEc:hka:wpaper:2016-001
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    References listed on IDEAS

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    Cited by:

    1. Gottfries, A. & Teulings, T., 2017. "Wage Posting, Nominal Rigidity, and Cyclical Inefficiencies," Cambridge Working Papers in Economics 1736, Faculty of Economics, University of Cambridge.
    2. Bauer, Anja & Lochner, Benjamin, 2020. "History dependence in wages and cyclical selection: Evidence from Germany," Labour Economics, Elsevier, vol. 67(C).
    3. Teulings, Coen & Gottfries, Axel, 2017. "Wage posting, nominal rigidity, and cyclical inefficiencies," CEPR Discussion Papers 12316, C.E.P.R. Discussion Papers.

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    More about this item

    Keywords

    wages; unemployment; occupation;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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