Wage Rigidity and Job Creation

Christian Haefke, Thijs van Rens and Marcus Sonntag

No 8968, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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 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; Search and matching models; Wage rigidity (search for similar items in EconPapers)
JEL-codes: E24 E32 J31 J41 J64 (search for similar items in EconPapers)
Date: 2012-05
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:
Working Paper: Wage Rigidity and Job Creation (2015)
Journal Article: Wage rigidity and job creation (2013)
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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