New Evidence on Real Wage Cyclicality within Employer-Employee Matches

Donggyun Shin and Gary Solon

No 12262, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In the most thorough study to date on wage cyclicality among job stayers, Devereux's (2001) analysis of men in the Panel Study of Income Dynamics produced two puzzling findings: (1) the real wages of salaried workers are noncyclical, and (2) wage cyclicality among hourly workers differs between two alternative wage measures. We examine these puzzles with additional evidence from other sources. Devereux's finding of noncyclical real wages among salaried job stayers is not replicated in the National Longitudinal Survey of Youth data. The NLSY data, however, do corroborate his finding of a discrepancy for hourly workers between the cyclicality of the two alternative wage measures. Evidence from the PSID Validation Study contradicts Devereux's conjecture that the discrepancy might be due to a procyclical bias from measurement error in average hourly earnings. Evidence from the Bureau of Labor Statistics establishment survey supports his hypothesis that overtime work accounts for part (but not all) of the discrepancy. We conclude that job stayers' real average hourly earnings are substantially procyclical and that an important portion of that procyclicality probably is due to compensation beyond base wages.

JEL-codes: E3 J3 (search for similar items in EconPapers)
Date: 2006-05
New Economics Papers: this item is included in nep-bec, nep-lab and nep-mac
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Citations: View citations in EconPapers (12)

Published as Donggyun Shin & Gary Solon, 2007. "New Evidence On Real Wage Cyclicality Within Employer-Employee Matches," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(5), pages 648-660, November.

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Journal Article: NEW EVIDENCE ON REAL WAGE CYCLICALITY WITHIN EMPLOYER–EMPLOYEE MATCHES (2007)
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