Wage Cyclicality and Composition Bias in the Norwegian Economy

Bjorn Dapi

Scandinavian Journal of Economics, 2020, vol. 122, issue 4, 1403-1430

Abstract: Using employer–employee register data, I estimate the real wage semi‐elasticity of aggregate unemployment for the years 1997–2014 in the Norwegian private sector. An increase of 1 percentage point in aggregate unemployment is associated with an average decrease of 2 percent in (total) daily wages. Although Norway has influential labor market institutions, wages in the Norwegian private sector are quite sensitive to business‐cycle fluctuations. Gender differences in wage cyclicality and compositional variation are considerable. Men have significantly more procyclical wages than women, and appear more likely to upgrade procyclically to better‐paying firms.

Date: 2020
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