Wage and Employment Cyclicalities at the Establishment Level

Christian Merkl and Heiko Stüber

No 9283, CESifo Working Paper Series from CESifo

Abstract: We document substantial cross-sectional heterogeneity of German establishments’ real wage cyclicality over the business cycle. While wages of the median establishment are moderately procyclical, 36 percent of establishments have countercyclical wages. We estimate a negative connection between establishments’ wage cyclicality and their employment cyclicality, thereby providing a benchmark for quantitative macroeconomic models. We propose and calibrate a labor market flow model to match various empirical facts and to perform counterfactual exercises. If all establishments behaved as the most procyclical ones, labor market amplification would drop by one-third. If all followed Nash bargaining, it would drop by more than two-thirds.

Keywords: wage cyclicality; employment cyclicality; labor market flow model; labor market dynamics; establishments; administrative data (search for similar items in EconPapers)
JEL-codes: E24 E32 J64 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-dge, nep-eur, nep-isf, nep-lab and nep-mac
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Related works:
Journal Article: Wage and employment cyclicalities at the establishment level (2024)
Working Paper: Wage and Employment Cyclicalities at the Establishment Level (2023)
Working Paper: Wage and employment cyclicalities at the establishment level (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_9283

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