Wage Cyclicality and Labour Market Institutions

João Pereira, Raul Ramos and Pedro Martins

No 16787, IZA Discussion Papers from IZA Network @ LISER

Abstract: Do labour institutions influence how wages respond to the business cycle? Such responsiveness can then shape several economic outcomes, including unemployment. In this paper, we examine the role of two key labour market institutions - collective bargaining and temporary contracts - upon wage cyclicality. Our evidence is drawn from rich, 2002-2020 matched data from Portugal. We find that workers not covered by collective agreements exhibit much higher wage cyclicality, especially if new hires, compared to covered workers. In contrast, workers under fixed-term contracts do not exhibit sizable differences in cyclicality compared to counterparts under open-ended contracts. Our findings highlight a novel angle through which labour institutions influence the labour market and the economy.

Keywords: real wages; business cycles; collective bargaining; temporary contracts; matched data (search for similar items in EconPapers)
JEL-codes: J31 J52 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2024-02
New Economics Papers: this item is included in nep-hrm and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Wage Cyclicality and Labor Market Institutions (2025)
Working Paper: Wage cyclicality and labour market institutions (2024)
Working Paper: Wage cyclicality and labour market institutions (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp16787

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