Cyclical labor costs within jobs
Daniel Schaefer and
Carl Singleton ()
Authors registered in the RePEc Author Service: Daniel Schäfer
European Economic Review, 2019, vol. 120, issue C
Using UK employer-employee panel data, we present novel facts on how wages and working hours respond to the business cycle within jobs. Firms reacted to the Great Recession with substantial real wage cuts and by recruiting more part-time workers. A one percentage point increase in the unemployment rate led to an average decline in real hourly wages of 2.6% for new hires as well as for job stayers. Hiring hours worked were substantially procyclical, while job-stayer hours were acyclical. These results show that real wages are not rigid and that the labor costs of new hires are especially flexible.
Keywords: Wage rigidity; Great recession; Hours worked; Job-level analysis (search for similar items in EconPapers)
JEL-codes: E24 E32 J30 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:120:y:2019:i:c:s0014292119301692
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