Wage Flexibility and Employment Fluctuations: Evidence from the Housing Sector

Jorn-Steffen Pischke

No 11418, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Many economists suspect that downward nominal wage rigidities in ongoing labor contracts are an important source of employment fluctuations over the business cycle but there is little direct empirical evidence on this conjecture. This paper compares three occupations in the housing sector with very different wage setting institutions, real estate agents, architects, and construction workers. I study the wage and employment responses of these occupations to the housing cycle, a proxy for labor demand shocks to the industry. The employment of real estate agents, whose pay is far more flexible than the other occupations, indeed reacts less to the cycle than employment in the other occupations. However, unless labor demand elasticities are large, the estimates do not suggest that the level of wage flexibility enjoyed by real estate agents would buffer employment fluctuations in response to demand shocks by more than 10 to 20 percent compared to completely rigid wages.

Keywords: Wage setting; Wage rigidity; Commissions; Real estate agents; Architects; Construction workers (search for similar items in EconPapers)
JEL-codes: E24 J20 J44 (search for similar items in EconPapers)
Date: 2016-07
New Economics Papers: this item is included in nep-cse and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://cepr.org/publications/DP11418 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Wage Flexibility and Employment Fluctuations: Evidence from the Housing Sector (2018)
Working Paper: Wage flexibility and employment fluctuations: evidence from the housing sector (2018)
Working Paper: Wage flexibility and employment fluctuations: evidence from the housing sector (2016)
Working Paper: Wage flexibility and employment fluctuations: evidencefrom the housing sector (2016)
Working Paper: Wage Flexibility and Employment Fluctuations: Evidence from the Housing Sector (2016)
Working Paper: Wage Flexibility and Employment Fluctuations: Evidence from the Housing Sector (2016)
Working Paper: Wage Flexibility and Employment Fluctuations: Evidence from the Housing Sector (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:11418

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP11418

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().