The path of wage growth and unemployment

Mary Daly, Bart Hobijn and Timothy Ni

FRBSF Economic Letter, 2013, issue july15

Abstract: After the Great Recession, the fraction of U.S. workers whose wages were frozen reached a record high. Many employers would have preferred to cut wages, but couldn?t do so because of the reluctance of workers to accept reduced compensation. These pent-up wage cuts initially propped up wage growth, reduced hiring, and pushed up unemployment. But, over the past 2 years, inflation has eroded the real value of frozen wages, slowing wage growth and reducing the unemployment rate. This is similar to, but more pronounced than, the pattern observed in past recessions.

Keywords: Wages (search for similar items in EconPapers)
Date: 2013
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