The Illusion of Cyclicality in Entry Wages

Ines Black and Ana Figueiredo

No 19430, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We show that occupation mobility creates the illusion of cyclical hiring wages. Using administrative data, we find that wages of new hires who remain in the same occupation are no more cyclical than those of existing workers, whereas wages of occupation switchers are highly cyclical. We uncover higher wage cyclicality also among workers who switch occupations within the same firm. Moreover, wage cyclicality increases, the more different current and previous occupations’ required skills. Our results suggest that the widely documented cyclicality of entry wages reflects composition effects due to changes in match quality in worker’s occupation, rather than wage flexibility.

Keywords: wage cyclicality; Occupation mobility (search for similar items in EconPapers)
JEL-codes: E24 E32 J31 J62 (search for similar items in EconPapers)
Date: 2024-09
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