Divergence in Post-Pandemic Earnings Growth: Evidence from Micro Data

Sophia Chen and Do Lee

No 2024/222, IMF Working Papers from International Monetary Fund

Abstract: We use a comprehensive employer-employee dataset to examine post-pandemic worker earnings in the US. Our findings reveal that earnings grew faster in counties that were less severely impacted at the onset of the pandemic. This divergence in growth was both substantial and persistent, particularly for lower-paid and nonmanagerial workers, as well as for those in smaller firms. Both wage increases and additional hours contributed to this earnings growth. This evidence aligns with a job-ladder framework, where labor market competition leads to a dispersion of earnings across counties but compresses earnings among workers in counties with strong labor markets. Our findings provide a microfoundation for the wage Phillips curve and have direct implications for stabilization policies.

Keywords: Earnings; Wage; Labor Market Conditions; Pandemic; Earnings growth; micro data; labor market competition; IMF working paper No. 2024/222; employer-employee dataset; Wages; Labor markets; Labor force; Unemployment; North America; Global (search for similar items in EconPapers)
Pages: 53
Date: 2024-10-11
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