Wage cyclicality and labour market institutions

João Pereira, Raul Ramos and Pedro Martins

No 1469, GLO Discussion Paper Series from Global Labor Organization (GLO)

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 new hires, compared to covered workers. In contrast, workers under temporary contracts do not exhibit sizable differences in cyclicality compared to counterparts under permanent (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; Employment Law; Matched data (search for similar items in EconPapers)
JEL-codes: J31 J52 J64 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-lma
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https://www.econstor.eu/bitstream/10419/300595/1/GLO-DP-1469.pdf (application/pdf)

Related works:
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:zbw:glodps:1469

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