Worker Flows and Wage Dynamics: Estimating Wage Growth Without Composition Effects

Juan F Jimeno, Raquel Carrasco () and J. Ignacio García Pérez ()

No 15543, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Wage dynamics is closely intertwined with job flows. However, composition effects associated to the different sizes and characteristics of workers entering/exiting into/from employment that may blur the "true" underlying wage growth, are not typically accounted for. In this paper, we take these composition effects into consideration and compute wage growth in Spain during the 2006-2018 period after netting out the consequences of employment dynamics. Our results show that the "true" underlying wage growth in the Spanish economy during recessions (expansions) was, on average, significantly lower (higher) that the observed with raw data. This may help to explain some macro puzzles, such as the "vanishing" Phillips curve.

Keywords: Employment dynamics; Wage dynamics; Composition effects (search for similar items in EconPapers)
JEL-codes: J30 J31 (search for similar items in EconPapers)
Date: 2020-12
New Economics Papers: this item is included in nep-cwa and nep-ltv
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Related works:
Journal Article: Worker flows and wage dynamics: estimating wage growth without composition effects (2024)
Working Paper: Worker Flows and Wage Dynamics: Estimating Wage Growth without Composition Effects (2021)
Working Paper: Worker flows and wage dynamics: estimating wage growth without composition effects (2020)
Working Paper: Worker Flows and Wage Dynamics: Estimating Wage Growth without Composition Effects (2020)
Working Paper: Worker Flows and Wage Dynamics: Estimating Wage Growth without Composition Effects (2020)
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