Wage rigidity and job creation

Christian Haefke, Marcus Sonntag, Thijs van Rens

Research output: Contribution to journalArticle

Abstract

Recent research in macroeconomics emphasizes the role of wage rigidity in accounting for the volatility of unemployment fluctuations. We use worker-level data from the CPS to measure the sensitivity of wages of newly hired workers to changes in aggregate labor market conditions. The wage of new hires, unlike the aggregate wage, is volatile and responds almost one-to-one to changes in labor productivity. We conclude that there is little evidence for wage rigidity in the data.

Original languageEnglish (US)
Pages (from-to)887-899
Number of pages13
JournalJournal of Monetary Economics
Volume60
Issue number8
DOIs
StatePublished - Nov 1 2013

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Keywords

  • Business cycle
  • Search and matching model
  • Wage rigidity

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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