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Wage Rigidity and Job Creation

Christian Haefke (), Marcus Sonntag and Thijs van Rens ()

No 773, 2006 Meeting Papers from Society for Economic Dynamics

Abstract: Shimer (2005) and Hall (2005) have documented the failure of standard labor market search models to match business cycle fluctuations in employment and unemployment. They argue that it is likely that wages are not adjusted as regularly as suggested by the model, which would explain why employment is more volatile than the model predicts. We explore whether this explanation is consistent with the data. The main insight is that the relevant wage data for the search model are not aggregate wages, but wages of newly hired workers. Preliminary results show that wages for those workers are much more volatile than aggregate wages, suggesting that other (real) frictions might be more important than wage stickiness

Keywords: search model; cyclical properties; wage rigidities; volatility; wages (search for similar items in EconPapers)
JEL-codes: E32 J30 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-dge, nep-lab and nep-mac
Date: 2006-12-03
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http://repec.org/sed2006/up.26703.1140043700.pdf (application/pdf)

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Journal Article: Wage rigidity and job creation (2013) Downloads
Working Paper: Wage Rigidity and Job Creation (2012) Downloads
Working Paper: Wage Rigidity and Job Creation (2012) Downloads
Working Paper: Wage rigidity and job creation (2012) Downloads
Working Paper: Wage rigidity and job creation (2009) Downloads
Working Paper: Wage Rigidity and Job Creation (2008) Downloads
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