Cyclicality of real wages and adjustment costs

Bruno Chiarini

Applied Economics, 1998, vol. 30, issue 9, 1239-1250

Abstract: This paper tackles the issue of the procyclicality of the real wage. We present a dynamic relationship between real wages and employment consistent with the long-run stationary equilibrium using a cointegrated VAR model. We find that wages are anticyclical and that a negative relationship between real wages and employment is necessary to achieve an economically identifiable stationary long run solution. The contentiousness of the topic does not appear so important once we recall some measurement issues and economic features of the Italian labour market.

Date: 1998
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Working Paper: Cyclicality of real wages and adjustment costs (1997)
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DOI: 10.1080/000368498325129

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