Wage Rigidity and Job Creation

Marcus Sonntag, Christian Haefke and Thijs van Rens

No 629, Working Papers from Barcelona School of Economics

Abstract: Recent research in macroeconomics emphasizes the role of wage rigidity in ac- counting 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 stickiness in the data. We also show, however, that a little wage rigidity goes a long way in amplifying the response of job creation to productivity shocks.

Keywords: business cycle; wage rigidity; search and matching model (search for similar items in EconPapers)
JEL-codes: E24 E32 J31 J41 J64 (search for similar items in EconPapers)
Date: 2015-09
New Economics Papers: this item is included in nep-lab and nep-mac
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Citations: View citations in EconPapers (12)

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Related works:
Journal Article: Wage rigidity and job creation (2013)
Working Paper: Wage Rigidity and Job Creation (2012)
Working Paper: Wage rigidity and job creation (2012)
Working Paper: Wage rigidity and job creation (2009)
Working Paper: Wage Rigidity and Job Creation (2008)
Working Paper: Wage Rigidity and Job Creation (2006)
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