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Why Are Wages Cyclical in the 1970s?

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  • Blank, Rebecca M

Abstract

This article investigates cyclicity in real wages between 1969 and 1982 using Panel Study of Income Dynamics data. There is little evidence that movements in and out of the labor market induced aggregate wage cyclicity during these years. However, cyclicity in the movement of workers between heterogeneous labor-market sectors affected aggregate wage cyclicity. While sector location is important, sector selectivity is not correlated with wages. Yet, even within sectors, cyclicity is present in real wages over this time period and is the result of cyclicity in overall wage levels, as well as in the coefficients associated with particular worker characteristics. Copyright 1990 by University of Chicago Press.

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  • Blank, Rebecca M, 1990. "Why Are Wages Cyclical in the 1970s?," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 16-47, January.
    • Handle: RePEc:ucp:jlabec:v:8:y:1990:i:1:p:16-47
    DOI: 10.1086/298235
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    1. Abowd, John M & Card, David, 1987. "Intertemporal Labor Supply and Long-term Employment Contracts," American Economic Review, American Economic Association, vol. 77(1), pages 50-68, March.
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    Cited by:

    1. Christopher A. Pissarides, 2007. "Unemployment And Hours Of Work: The North Atlantic Divide Revisited," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(1), pages 1-36, February.
    2. Arozamena, Leandro & Centeno, Mario, 2006. "Tenure, business cycle and the wage-setting process," European Economic Review, Elsevier, vol. 50(2), pages 401-424, February.
    3. Anger, Silke, 2011. "The cyclicality of effective wages within employer–employee matches in a rigid labor market," Labour Economics, Elsevier, vol. 18(6), pages 786-797.
    4. Silke Anger, 2007. "The Cyclicality of Effective Wages within Employer-Employee Matches: Evidence from German Panel Data," Discussion Papers of DIW Berlin 719, DIW Berlin, German Institute for Economic Research.
    5. Grace Weishi Gu & Eswar Prasad, 2018. "New Evidence on Cyclical Variation in Labor Costs in the U.S," NBER Working Papers 24266, National Bureau of Economic Research, Inc.
    6. Audra Bowlus & Haoming Liu & Chris Robinson, 2002. "Business Cycle Models, Aggregation, and Real Wage Cyclicality," Journal of Labor Economics, University of Chicago Press, vol. 20(2), pages 308-335, Part.
    7. Christopher A. Pissarides, 2009. "The Unemployment Volatility Puzzle: Is Wage Stickiness the Answer?," Econometrica, Econometric Society, vol. 77(5), pages 1339-1369, September.
    8. Charles Brown & Greg J. Duncan & Frank P. Stafford, 1996. "Data Watch: The Panel Study of Income Dynamics," Journal of Economic Perspectives, American Economic Association, vol. 10(2), pages 155-168, Spring.
    9. James R. Hines & Hilary Hoynes & Alan B. Krueger, 2001. "Another Look at Whether a Rising Tide Lifts All Boats," Working Papers 833, Princeton University, Department of Economics, Industrial Relations Section..
    10. James Hines & Hilary Hoynes & Alan Krueger, 2001. "Another Look at Whether a Rising Tide Lifts All Boats," Working Papers 833, Princeton University, Department of Economics, Industrial Relations Section..
    11. Haoming Liu, 2003. "A cross-country comparison of the cyclicality of real wages," Canadian Journal of Economics, Canadian Economics Association, vol. 36(4), pages 923-948, November.
    12. Robert W. Rich & Joseph Tracy, 2022. "Heterogeneity and the Effects of Aggregation on Wage Growth," Working Papers 2211, Federal Reserve Bank of Dallas.
    13. Carrington, William J & McCue, Kristin & Pierce, Brooks, 1996. "The Role of Employer-Employee Interactions in Labor Market Cycles: Evidence from the Self-Employed," Journal of Labor Economics, University of Chicago Press, vol. 14(4), pages 571-602, October.
    14. Xin Xu & Robert Kaestner, 2010. "The Business Cycle and Health Behaviors," NBER Working Papers 15737, National Bureau of Economic Research, Inc.
    15. Xu, Xin, 2013. "The business cycle and health behaviors," Social Science & Medicine, Elsevier, vol. 77(C), pages 126-136.
    16. Beth Anne Wilson, "undated". "Movements of Wages over the Business Cycle: An Intra-Firm View," Finance and Economics Discussion Series 1997-01, Board of Governors of the Federal Reserve System (U.S.), revised 10 Dec 2019.

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    More about this item

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • D69 - Microeconomics - - Welfare Economics - - - Other

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