Downward Rigidity in the Wage for New Hires

Jonathon Hazell () and Bledi Taska ()
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Jonathon Hazell: London School of Economics
Bledi Taska: Lightcast

No 16512, IZA Discussion Papers from IZA Network @ LISER

Abstract: Wage rigidity is an important explanation for unemployment fluctuations. In benchmark models wages for new hires are key, but there is limited evidence on this margin. We use wages posted on vacancies, with job and establishment information, to measure the wage for new hires. We show that our measure of the wage for new hires is rigid downward and flexible upward, in two steps. First, wages change infrequently at the job level, and fall especially rarely. Second, wages do not respond to rises in unemployment, but respond strongly to falls in unemployment. Job information is crucial for detecting downward rigidity.

Keywords: wage rigidity; online vacancy data (search for similar items in EconPapers)
JEL-codes: E24 E32 J31 J63 (search for similar items in EconPapers)
Pages: 81 pages
Date: 2023-10
New Economics Papers: this item is included in nep-lma and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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