Real Wages and the business cycle: Accounting for worker, firm, and job title heterogeneity

Anabela Carneiro, Paulo Guimarães, Pedro Portugal

Research output: Contribution to journalArticle

57 Citations (Scopus)

Abstract

Using a longitudinal matched employer-employee dataset for Portugal over the 1986-2007 period, this study analyzes the wage responses to aggregate labor market conditions for newly hired workers and existing workers within the same firm. Accounting for worker, firm, and job title heterogeneity, the data support the hypothesis that entry wages are more procyclical than wages of stayers. A one point increase in the unemployment rate decreases wages of newly hired workers within a given firm-job title by around 2.7 percent and by 2.2 percent for stayers within the same firm-job title. Finally, the results reveal a one-for-one wage response to changes in labor productivity.

Original languageEnglish
Pages (from-to)133-152
Number of pages20
JournalAmerican Economic Journal: Macroeconomics
Volume4
Issue number2
DOIs
Publication statusPublished - Apr 2012

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