scholarly journals Real Wages and the Business Cycle: Accounting for Worker, Firm, and Job Title Heterogeneity

2012 ◽  
Vol 4 (2) ◽  
pp. 133-152 ◽  
Author(s):  
Anabela Carneiro ◽  
Paulo Guimarães ◽  
Pedro Portugal
Keyword(s):  
Labor Market ◽  
Business Cycle ◽  
Unemployment Rate ◽  
Real Wages ◽  
Labor Market Conditions ◽  
Business Cycle Accounting ◽  
Point Increase ◽  
Job Title ◽  
The Business Cycle ◽  
Newly Hired

Using a longitudinal matched employer-employee dataset for Portugal over the 1986–2007 period, this study analyzes the wage responses to aggregate labor market conditions for newly hired workers and existing workers within the same firm. Accounting for worker, firm, and job title heterogeneity, the data support the hypothesis that entry wages are more procyclical than wages of stayers. A one point increase in the unemployment rate decreases wages of newly hired workers within a given firm-job title by around 2.7 percent and by 2.2 percent for stayers within the same firm-job title. Finally, the results reveal a one-for-one wage response to changes in labor productivity. (JEL: E24, E32, J64)

scholarly journals Labor Market Conditions and Partisan Voting: How Unemployment Hurts the Left

2020 ◽  
Author(s):  
Anton Brännlund
Keyword(s):  
Labor Market ◽  
Panel Data ◽  
Business Cycle ◽  
Unemployment Rate ◽  
Social Insurance ◽  
Social Spending ◽  
Left Wing ◽  
Market Conditions ◽  
Labor Market Conditions ◽  
The Business Cycle

Abstract Fluctuations in the labor market are a natural part of the business cycle, and they have attracted attention from political scientists for decades. Some scholars argue that left-wing parties benefit from rising rates of unemployment while others claim that voters rally behind conservative parties when the labor market weakens. I argue that the heterogeneous response of voters to a rise in the unemployment rate is due to differences in asset wealth. Put simply, the well-off have less need for social insurance, so they vote for conservative parties in order to put a cap on social spending when the unemployment rate rises; by contrast, asset-less voter opt for the left, with an eye to preserving their entitlements. I show with panel data from Swedish electoral districts that left-wing parties gain an electoral advantage when the local unemployment rate rises in less well-off areas, but they lose support when unemployment rises in wealthier districts.

scholarly journals Labor Market Indicator for Colombia

2021 ◽  
pp. 1-32
Author(s):  
Deicy J. Cristiano-Botia ◽  
Manuel Dario Hernandez-Bejarano ◽  
Mario A. Ramos-Veloza
Keyword(s):  
Time Series ◽  
Labor Market ◽  
Business Cycle ◽  
Unemployment Rate ◽  
Economic Activity ◽  
Growth Cycle ◽  
Current State ◽  
The Business Cycle ◽  
Market Indicator

Although the unemployment rate is traditionally used to diagnose the current state of the labor market, this indicator does not reflect the existence of asymmetries, mobility costs, and rigidities which impede labor to freely flow over the business cycle. Thus, to get a better portrait of the momentum, we construct the Labor Market Indicator (LMI) focusing on the cyclical similarities of eighteen time series from the Colombian household, industrial, and opinion surveys between 2001 and 2019. Our indicator summarizes the growth cycle of the labor market and its evolution is closely related to the output and unemployment GAP. This indicator is useful for policy analysis as it is useful to forecast headline inflation, it also complements the diagnosis of the current momentum of the labor market, the general economic activity, and the characterization of economic phases and turning points.

scholarly journals Measuring What Employers Do about Entry Wages over the Business Cycle: A New Approach

2012 ◽  
Vol 4 (4) ◽  
pp. 36-55 ◽  
Author(s):  
Pedro S Martins ◽  
Gary Solon ◽  
Jonathan P Thomas
Keyword(s):  
Longitudinal Data ◽  
Business Cycle ◽  
Unemployment Rate ◽  
Crucial Role ◽  
New Approach ◽  
Macroeconomic Models ◽  
Cyclical Variation ◽  
Wage Cyclicality ◽  
The Business Cycle ◽  
Newly Hired

Rigidity in real hiring wages plays a crucial role in some recent macroeconomic models. But are hiring wages really so noncyclical? We propose using employer/employee longitudinal data to track the cyclical variation in the wages paid to workers newly hired into specific entry jobs. Illustrating the methodology with 1982–2008 data from the Portuguese census of employers, we find real entry wages were about 1.8 percent higher when the unemployment rate was 1 percentage point lower. Like most recent evidence on other aspects of wage cyclicality, our results suggest that the cyclical elasticity of wages is similar to that of employment. (JEL E24, E32, J31, J64)

scholarly journals DIAGNOSING LABOR MARKET SEARCH MODELS: A MULTIPLE-SHOCK APPROACH

2012 ◽  
Vol 18 (3) ◽  
pp. 548-572 ◽  
Author(s):  
Kenneth Beauchemin ◽  
Murat Tasci
Keyword(s):  
Labor Market ◽  
Business Cycle ◽  
Shock Model ◽  
Business Cycle Accounting ◽  
Matching Efficiency ◽  
Market Search ◽  
The Business Cycle ◽  
Labor Market Search ◽  
Market Variables ◽  
Multiple Shock

We construct a multiple-shock, discrete-time version of the Mortensen–Pissarides labor market search model to investigate the basic model's well-known tendency to underpredict the volatility of key labor market variables. In addition to the standard labor productivity shock, we introduce shocks to matching efficiency and job separation. We estimate the multiple-shock model and then simulate its properties. Although it generates significantly more volatility while preserving the Beveridge curve relationship, the multiple-shock model generates counterfactual implications for the cyclicality of job separations. Using a business cycle accounting approach, next we show that the model requires significantly procyclical and volatile matching efficiency and counterfactually procyclical job separations to render the observed data without error. We conjecture that the basic Mortensen–Pissarides model lacks mechanisms to generate sufficiently strong labor market reallocation over the business cycle, and suggest nontrivial labor force participation and job-to-job transitions as promising avenues of research.

scholarly journals Job Selection and Wages over the Business Cycle

2013 ◽  
Vol 103 (2) ◽  
pp. 771-803 ◽  
Author(s):  
Marcus Hagedorn ◽  
Iourii Manovskii
Keyword(s):  
Labor Market ◽  
Business Cycle ◽  
Job Search ◽  
Predictive Power ◽  
Explanatory Power ◽  
Market Conditions ◽  
History Dependence ◽  
Labor Market Conditions ◽  
Job Selection ◽  
The Business Cycle

We consider a model with on-the-job search where current wages depend only on current aggregate labor market conditions and idiosyncratic match-specific productivities. We show theoretically that the model replicates the findings in Bils (1985) and Beaudry and DiNardo (1991) on the history dependence in wages. We develop a method to measure match qualities in the data and show empirically that various variables summarizing past aggregate labor market conditions have explanatory power for current wages only because they are correlated with match qualities. They lose any predictive power once match qualities are accounted for. (JEL E3, E24, J3)

scholarly journals Autonomes Fahren statt Stop and Go: Vorschläge zur effektiven Gestaltung der deutschen Kurzarbeit

2019 ◽  
Vol 68 (3) ◽  
pp. 252-260
Author(s):  
Almut Balleer ◽  
Britta Gehrke ◽  
Brigitte Hochmuth ◽  
Christian Merkl
Keyword(s):  
Labor Market ◽  
Business Cycle ◽  
Great Recession ◽  
Timely Manner ◽  
Rule Based ◽  
The Great Recession ◽  
Stop And Go ◽  
Time Work ◽  
The Business Cycle ◽  
Short Time

Abstract This article argues that short-time work stabilized employment in Germany substantially during the Great Recession in 2008/09. The labor market instrument acted in timely manner, as it was used in a rule-based fashion. In addition, discretionary extensions were effective due to their interaction with the business cycle. To ensure that short-time work will be effective in the future, this article proposes an automatic facilitation of the access to short-time work in severe recessions. This reduces the likelihood of a too extensive use at the wrong point in time as well as structural instead of cyclical interventions.

scholarly journals Asset Returns, the Business Cycle and the Labor Market

2013 ◽  
Vol 14 (3) ◽  
pp. 372-397 ◽  
Author(s):  
Burkhard Heer ◽  
Alfred Maußner
Keyword(s):  
Labor Market ◽  
Business Cycle ◽  
Equity Premium ◽  
Working Hours ◽  
New Keynesian ◽  
Monetary Shocks ◽  
Productivity Shocks ◽  
New Keynesian Models ◽  
The Business Cycle ◽  
Sticky Wages

Abstract We review the labor market implications of recent real-business cycle and New Keynesian models that successfully replicate the empirical equity premium. We document the fact that all models reviewed in this article that do not feature either sticky wages or immobile labor between two production sectors as in Boldrin et al. (2001) imply a negative correlation of working hours and output that is not observed empirically. Within the class of Neo-Keynesian models, sticky prices alone are demonstrated to be less successful than rigid nominal wages with respect to the modeling of the labor market stylized facts. In addition, monetary shocks in these models are required to be much more volatile than productivity shocks to match statistics from both the asset and labor market.

Business Cycles and Apprenticeships

2021 ◽  
Author(s):  
Samuel Muehlemann ◽  
Stefan Wolter
Keyword(s):  
Labor Market ◽  
Business Cycle ◽  
Empirical Studies ◽  
Cost Effective ◽  
Skilled Labor ◽  
Market Failures ◽  
Task Forces ◽  
Apprenticeship Training ◽  
The Business Cycle ◽  
Over Time

The economic reasons why firms engage in apprenticeship training are twofold. First, apprenticeship training is a potentially cost-effective strategy for filling a firm’s future vacancies, particularly if skilled labor on the external labor market is scarce. Second, apprentices can be cost-effective substitutes for other types of labor in the current production process. As current and expected business and labor market conditions determine a firm’s expected work volume and thus its future demand for skilled labor, they are potentially important drivers of a firm’s training decisions. Empirical studies have found that the business cycle affects apprenticeship markets. However, while the economic magnitude of these effects is moderate on average, there is substantial heterogeneity across countries, even among those that at first sight seem very similar in terms of their apprenticeship systems. Moreover, identification of business cycle effects is a difficult task. First, statistics on apprenticeship markets are often less developed than labor market statistics, making empirical analyses of demand and supply impossible in many cases. In particular, data about unfilled apprenticeship vacancies and unsuccessful applicants are paramount for assessing potential market failures and analyzing the extent to which business cycle fluctuations may amplify imbalances in apprenticeship markets. Second, the intensity of business cycle effects on apprenticeship markets is not completely exogenous, as governments typically undertake a variety of measures, which differ across countries and may change over time, to reduce the adverse effects of economic downturns on apprenticeship markets. During the economic crisis related to the COVID-19 global pandemic, many countries took unprecedented actions to support their economies in general and reacted swiftly to introduce measures such as the provision of financial subsidies for training firms or the establishment of apprenticeship task forces. As statistics on apprenticeship markets improve over time, such heterogeneity in policy measures should be exploited to improve our understanding of the business cycle and its relationship with apprenticeships.

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