Wage Cyclicality and Labor Market Sorting

Ana Figueiredo

American Economic Review: Insights, 2022, vol. 4, issue 4, 425-42

Abstract: This paper uses a measure of skill mismatch to separate wage flexibility from confounding variation in wages driven by differences in job quality over the business cycle. I first show that the high cyclicality of job switchers' wages goes beyond cyclical movements in skill mismatch. Then I uncover large differences in wage cyclicality across the skill mismatch distribution. Among incumbent workers, wages are acyclical in good matches but procyclical in poor matches, in particular for overqualified workers.

JEL-codes: E32 J24 J31 J41 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1257/aeri.20210161

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