Nominal Wage Adjustments during the Pandemic Recession

John Grigsby, Erik Hurst, Ahu Yildirmaz and Yulia Zhestkova

AEA Papers and Proceedings, 2021, vol. 111, 258-62

Abstract: In this paper, we show that the pandemic recession has led to frequent cuts in nominal wages. Within three months in 2020, as many wage cuts had occurred as occurred throughout the Great Recession. Unlike employment declines, wage cuts were concentrated at the top of the wage distribution. However, these cuts have been relatively short lived, particularly among high earners. Finally, wage cuts have been concentrated in firms that have seen large employment declines. Wage cuts appear not to be a substitute for cutting employment, at least when the shock to labor demand is this large.

JEL-codes: E24 E32 G01 I12 J23 J31 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (5)

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DOI: 10.1257/pandp.20211056

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