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The Illusion of Cyclicality in Entry Wages

Author

Listed:
  • Black, Ines

    (Duke University)

  • Figueiredo, Ana

    (Vrije Universiteit Amsterdam)

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," IZA Discussion Papers 17189, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp17189
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    References listed on IDEAS

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    More about this item

    Keywords

    wage cyclicality; occupational mobility; reallocation; match quality;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • 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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