Cyclical Quality Adjustment in the Labor Market
AbstractVarious reasons have been put forward to explain the stylized fact that the wages of job starters are more procyclical than the wages of workers who don’t change jobs. I explore the theoretical and empirical basis for one such reason: firms adjust the quality of workers assigned to jobs over the business cycle. I show that there is evidence that quality adjustment is an important feature of cyclical adjustment in labor markets. New hires of any particular ability level get lower quality jobs in recessions than in booms. The results indicate that about half of the wage procyclicality of new hires can be ascribed to variation in the matches between firms and workers over the business cycle. These systematic changes in assignment imply that government policy aimed at high-skill sectors can have positive effects on low-skill individuals by increasing the probability that they upgrade occupation and industry.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoArticle provided by Southern Economic Association in its journal Southern Economic Journal.
Volume (Year): 70 (2004)
Issue (Month): 3 (January)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Stüber, Heiko, 2012. "Are real entry wages rigid over the business cycle? : Empirical evidence for Germany from 1977 to 2009," IAB Discussion Paper 201206, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
- Ludsteck, Johannes & Haupt, Harald, 2007. "An Empirical Test of the Reder Hypothesis," Discussion Papers in Economics 1397, University of Munich, Department of Economics.
- Anger, Silke, 2011.
"The cyclicality of effective wages within employer–employee matches in a rigid labor market,"
Elsevier, vol. 18(6), pages 786-797.
- Anger, Silke, 2011. "The Cyclicality of Effective Wages within Employer–Employee Matches in a Rigid Labor Market," EconStor Open Access Articles, ZBW - German National Library of Economics.
- Anger, Silke, 2011. "The Cyclicality of Effective Wages within Employer-Employee Matches in a Rigid Labor Market," IZA Discussion Papers 5489, Institute for the Study of Labor (IZA).
- Costain, James S. & Reiter, Michael, 2008.
"Business cycles, unemployment insurance, and the calibration of matching models,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 32(4), pages 1120-1155, April.
- James Costain & Michael Reiter, 2005. "Business Cycles, Unemployment Insurance and the Calibration of Matching Models," Working Papers 215, Barcelona Graduate School of Economics.
- James S. Costain & Michael Reiter, 2003. "Business Cycles, Unemployment Insurance, and the Calibration of Matching Models," CESifo Working Paper Series 1008, CESifo Group Munich.
- James S. Costain & Michael Reiter, 2003. "Business cycles, unemployment insurance and the calibration of matching models," Economics Working Papers 872, Department of Economics and Business, Universitat Pompeu Fabra, revised Oct 2006.
- Ludsteck, Johannes, 2008. "Wage cyclicality and the wage curve under the microscope," IAB Discussion Paper 200811, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
- Schlicht, Ekkehart, 2008. "Lohnspreizung und Effizienz," Discussion Papers in Economics 2117, University of Munich, Department of Economics.
- Martins, Pedro S. & Solon, Gary & Thomas, Jonathan P., 2010.
"Measuring What Employers Really Do about Entry Wages over the Business Cycle,"
IZA Discussion Papers
4757, Institute for the Study of Labor (IZA).
- Pedro S. Martins & Gary Solon & Jonathan Thomas, 2010. "Measuring What Employers Really Do about Entry Wages over the Business Cycle," NBER Working Papers 15767, National Bureau of Economic Research, Inc.
- Ammermueller, Andreas & Kuckulenz, Anja & Zwick, Thomas, 2009.
"Aggregate unemployment decreases individual returns to education,"
Economics of Education Review,
Elsevier, vol. 28(2), pages 217-226, April.
- Ammermüller, Andreas & Kuckulenz, Anja & Zwick, Thomas, 2006. "Aggregate Unemployment Decreases Individual Returns to Education," ZEW Discussion Papers 06-34, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Pia Orrenius & Madeline Zavodny, 2011.
"Immigrants’ employment outcomes over the business cycle,"
Federal Reserve Bank of Dallas, issue Sep.
- Orrenius, Pia M. & Zavodny, Madeline, 2010. "Immigrants' Employment Outcomes over the Business Cycle," IZA Discussion Papers 5354, Institute for the Study of Labor (IZA).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Laura Razzolini).
If references are entirely missing, you can add them using this form.