Real wage cyclicality in the PSID

Eric Swanson

No 2007-15, Working Paper Series from Federal Reserve Bank of San Francisco

Abstract: Previous studies of real wage cyclicality have made only sparing use of the microdata detail that is available in the Panel Study of Income Dynamics (PSID). The present paper brings to bear this additional detail to investigate the robustness of previous results and to examine whether there are important cross-sectional and demographic differences in wage cyclicality. Although real wages were procyclical across the entire distribution of workers from 1967 to 1991, the wages of lower-income, younger, and less-educated workers exhibited greater procyclicality. However, workers' straight-time hourly pay rates have been acyclical, suggesting that more variable pay margins such as bonuses, overtime, late shift premia, and commissions have played a substantial if not primary role in generating procyclicality.

Keywords: Wages; Labor market (search for similar items in EconPapers)
Date: 2007
New Economics Papers: this item is included in nep-lab
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