The Cyclicality of Effective Wages within Employer-Employee Matches in a Rigid Labor Market

Silke Anger

No 5489, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This study analyzes real wage cyclicality for male full-time workers within employer-employee matches in Germany over the period 1984-2004. Five different wage measures are compared: the standard hourly wage rate; hourly wage earnings including overtime and bonus pay; the effective wage, which takes into account unpaid overtime; and monthly earnings, with and without additional pay. None of the hourly wage measures exhibits cyclicality except for the group of salaried workers with unpaid overtime. Their effective wages show a strongly procyclical reaction to changes in unemployment. Despite acyclical wage rates, salaried workers without unpaid overtime experienced procyclical earnings movements if they had income from extra pay. Monthly earnings were also procyclical for hourly paid workers with overtime pay. These findings suggest that cyclical earnings movements are generated by variable pay components, such as bonuses and overtime, and by flexible working hours. The degree of earnings procyclicality revealed for the German labor market is comparable to the United States.

Keywords: bonus payments; unpaid overtime; effective wages; real wage cyclicality; firm stayers (search for similar items in EconPapers)
JEL-codes: E32 J31 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2011-02
New Economics Papers: this item is included in nep-bec, nep-lab and nep-mac
References: View complete reference list from CitEc
Citations: View citations in EconPapers (30)

Published - revised version published in: Labour Economics, 2011, 18 (6), 786-797

Downloads: (external link)
https://docs.iza.org/dp5489.pdf (application/pdf)

Related works:
Journal Article: The cyclicality of effective wages within employer–employee matches in a rigid labor market (2011)
Journal Article: The Cyclicality of Effective Wages within Employer–Employee Matches in a Rigid Labor Market (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp5489

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().