Wage Cuts as Investment in Future Wage Growth
AbstractWage cuts are often presumed to reflect an adverse change in economic constraints. However, several theoretical models have shown they can be a form of investment in future wage growth. This paper provides empirical evidence of the latter by explicitly modeling the worker's job choice when the job offer consists of both a starting wage and expected future wage growth. We use our analytical model to estimate the distribution of job offers faced by workers who are searching across jobs differing in both initial wage and expected wage growth. For females, roughly one-third of job changes that result in immediate wage cuts are transitions to jobs that have a higher value function than the existing job. For males, the corresponding value is one-fifth. Copyright 2008 The Authors.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by CEIS in its journal LABOUR.
Volume (Year): 22 (2008)
Issue (Month): 1 (03)
Contact details of provider:
Postal: Via Columbia, 2 00133 Roma
Phone: 0039 06 2040234
Fax: 0039 06 2020687
Web page: http://www.blackwellpublishing.com/journal.asp?ref=1121-7081
More information through EDIRC
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Gielen, Anne C. & Tatsiramos, Konstantinos, 2012.
"Quit Behavior and the Role of Job Protection,"
IZA Discussion Papers
6540, Institute for the Study of Labor (IZA).
- Eric Smith & Carlos Carrillo Tudela, 2007.
"Wage Dispersion and Wage Dynamics Within and Across Firms,"
2007 Meeting Papers
615, Society for Economic Dynamics.
- Carrillo-Tudela, Carlos & Smith, Eric, 2009. "Wage Dispersion and Wage Dynamics Within and Across Firms," IZA Discussion Papers 4031, Institute for the Study of Labor (IZA).
- Carlos Carrillo-Tudela & Eric Smith, 2009. "Wage dispersion and wage dynamics within and across firms," Working Paper 2009-22, Federal Reserve Bank of Atlanta.
- Chao Fu, 2010.
"Online Appendix to "Training, search and wage dispersion","
10-77, Review of Economic Dynamics.
- Martin, John P. & Scarpetta, Stefano, 2011.
"Setting It Right: Employment Protection, Labour Reallocation and Productivity,"
IZA Policy Papers
27, Institute for the Study of Labor (IZA).
- John Martin & Stefano Scarpetta, 2012. "Setting It Right: Employment Protection, Labour Reallocation and Productivity," De Economist, Springer, vol. 160(2), pages 89-116, June.
- Carlos Carrillo-Tudela & Eric Smith, 2012.
CESifo Working Paper Series
3741, CESifo Group Munich.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.