Exchange Rates and Wages

Linda Goldberg and Joseph Tracy

No 8137, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The effects of exchange rate fluctuations across the population is an important issue for increasingly globalized economies. Previous studies using industry aggregate data have found differences across industries in the labor market implications of exchange rates, reporting that industry wages are significantly more responsive than industry employment. We offer an explanation for this paradoxical finding. Using Current Population Survey data for 1976 through 1998, we document that the main mechanism for exchange rate effects on wages occurs through job turnover and the strong consequences this has for the wages of workers undergoing such job transitions. By contrast, workers who remain with the same employer experience little if any wage impacts from exchange rate shocks. In addition, we find that the least educated workers who also have the most frequent job changes shoulder the largest adjustments to exchange rates.

JEL-codes: F3 F4 (search for similar items in EconPapers)
Date: 2001-02
New Economics Papers: this item is included in nep-ifn
Note: IFM ITI LS
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Citations: View citations in EconPapers (45)

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Working Paper: Exchange rates and wages (2001)
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