IDEAS home Printed from https://ideas.repec.org/p/een/camaaa/2020-15.html
   My bibliography  Save this paper

How wages respond to the job-finding and job-to-job transition rates? Evidence from New Zealand administrative data

Author

Listed:
  • Christopher Ball
  • Nicolas Groshenny
  • Özer Karagedikli
  • Murat Özbilgin
  • Finn Robinson

Abstract

We use administrative data from New Zealand and exploit regional variations to evaluate the predictive power for wage dynamics of the job-finding and job-to-job transition rates. We find that the job-finding rate from unemployment plays a role in describing the wage dynamics of newly hired workers even after controlling for the job-to-job transition rate. The wages of new hires are much more responsive to both transition rates than the wages of job stayers. We then distinguish between the new hires transitioning from employment (job switchers) and the new hires coming from unemployment. The wages of job switchers are primarily related to the pace of job-to-job reallocation and less significantly to the jobfinding rate. The wages of new hires from unemployment are exclusively linked to the jobfinding rate and this association is stronger at the lower half of the wage distribution. The wages of new hires from unemployment are more responsive to the job-finding rate than the wages of job stayers. The job-to-job transition rate has no impact on the wage dynamics of job stayers once the job-finding rate and the transition rate from inactivity to employment are controlled for.

Suggested Citation

  • Christopher Ball & Nicolas Groshenny & Özer Karagedikli & Murat Özbilgin & Finn Robinson, 2020. "How wages respond to the job-finding and job-to-job transition rates? Evidence from New Zealand administrative data," CAMA Working Papers 2020-15, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  • Handle: RePEc:een:camaaa:2020-15
    as

    Download full text from publisher

    File URL: https://cama.crawford.anu.edu.au/sites/default/files/publication/cama_crawford_anu_edu_au/2022-03/15_2020_ball_groshenny_karagedikli_ozbilgin_robinson0.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Elsby, Michael W.L. & Hobijn, Bart & Şahin, Ayşegül, 2015. "On the importance of the participation margin for labor market fluctuations," Journal of Monetary Economics, Elsevier, vol. 72(C), pages 64-82.
    2. John C. Haltiwanger & Henry R. Hyatt & Lisa B. Kahn & Erika McEntarfer, 2018. "Cyclical Job Ladders by Firm Size and Firm Wage," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(2), pages 52-85, April.
    3. Andrew Coleman & Özer Karagedikli, 2018. "Residential construction and population growth in New Zealand: 1996-2016," Reserve Bank of New Zealand Discussion Paper Series DP2018/02, Reserve Bank of New Zealand.
    4. Jed Armstrong & Özer Karagedikli, 2017. "The role of non-participants in labour market dynamics," Reserve Bank of New Zealand Analytical Notes series AN2017/01, Reserve Bank of New Zealand.
    5. R. Jason Faberman & Alejandro Justiniano, 2015. "Job Switching and Wage Growth," Chicago Fed Letter, Federal Reserve Bank of Chicago.
    6. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, December.
    7. Beaudry, Paul & DiNardo, John, 1991. "The Effect of Implicit Contracts on the Movement of Wages over the Business Cycle: Evidence from Micro Data," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 665-688, August.
    8. Özer Karagedikli, 2018. "Job-to-job flows and inflation: Evidence from administrative data in New Zealand," Reserve Bank of New Zealand Analytical Notes series AN2018/09, Reserve Bank of New Zealand.
    9. Basu, S. & House, C.L., 2016. "Allocative and Remitted Wages," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 297-354, Elsevier.
    10. Greg Howard, 2020. "The Migration Accelerator: Labor Mobility, Housing, and Demand," American Economic Journal: Macroeconomics, American Economic Association, vol. 12(4), pages 147-179, October.
    11. Fatih Karahan & Ryan Michaels & Benjamin Pugsley & Ayşegül Şahin & Rachel Schuh, 2017. "Do Job-to-Job Transitions Drive Wage Fluctuations over the Business Cycle?," American Economic Review, American Economic Association, vol. 107(5), pages 353-357, May.
    12. Susanto Basu & Christopher L. House, 2016. "Allocative and Remitted Wages: New Facts and Challenges for Keynesian Models," NBER Working Papers 22279, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Allan, Corey & Maré, David C., 2021. "Do Workers Share in Firm Success? Pass-through Estimates for New Zealand," IZA Discussion Papers 14764, Institute of Labor Economics (IZA).
    2. Finn Robinson, 2020. "Vacancies, unemployment and labour market slack in New Zealand," Reserve Bank of New Zealand Analytical Notes series AN2020/07, Reserve Bank of New Zealand.
    3. Shaun Markham, 2020. "Monetary policy and regional unemployment," Reserve Bank of New Zealand Analytical Notes series AN2020/08, Reserve Bank of New Zealand.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cynthia Doniger, 2019. "Do Greasy Wheels Curb Inequality?," 2019 Meeting Papers 1163, Society for Economic Dynamics.
    2. Bauer, Anja & Lochner, Benjamin, 2020. "History dependence in wages and cyclical selection: Evidence from Germany," Labour Economics, Elsevier, vol. 67(C).
    3. Christopher Ball & Nicolas Groshenny & Oezer Karagedikli & Murat Oezbilgin & Finn Robinson, 2020. "Low wage growth and job-to-job transitions: Evidence from administrative data in New Zealand," MAGKS Papers on Economics 202021, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    4. Cynthia L. Doniger, 2021. "The Ways the Cookie Crumbles: Education and the Margins of Cyclical Adjustment in the Labor Market," Finance and Economics Discussion Series 2021-019, Board of Governors of the Federal Reserve System (U.S.).
    5. Grace Weishi Gu & Eswar Prasad & Thomas Moehrle, 2020. "New Evidence on Cyclical Variation in Average Labor Costs in the United States," The Review of Economics and Statistics, MIT Press, vol. 102(5), pages 966-979, December.
    6. Kevin x.d. Huang & Munechika Katayama & Mototsugu Shintani & Takayuki Tsuruga, 2017. "Sticky-Wage Models and Knowledge Capital: A Note," Vanderbilt University Department of Economics Working Papers 17-00006, Vanderbilt University Department of Economics.
    7. Andrew Snell & Heiko Stuber & Jonathan Thomas, 2018. "Downward Real Wage Rigidity and Equal Treatment Wage Contracts: Theory and Evidence," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 30, pages 265-284, October.
    8. R. Jason Faberman & Andreas I. Mueller & Ayşegül Şahin & Giorgio Topa, 2022. "Job Search Behavior Among the Employed and Non‐Employed," Econometrica, Econometric Society, vol. 90(4), pages 1743-1779, July.
    9. Christopher J. Nekarda & Valerie A. Ramey, 2020. "The Cyclical Behavior of the Price‐Cost Markup," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 52(S2), pages 319-353, December.
    10. Robert E. Hall, 2017. "High Discounts and High Unemployment," American Economic Review, American Economic Association, vol. 107(2), pages 305-330, February.
    11. Eran Yashiv, 2016. "Aggregate Hiring and the Value of Jobs Along the Business Cycle," Discussion Papers 1637, Centre for Macroeconomics (CFM).
    12. Mark Bils & Yongsung Chang & Sun-Bin Kim, 2022. "How Sticky Wages in Existing Jobs Can Affect Hiring," American Economic Journal: Macroeconomics, American Economic Association, vol. 14(1), pages 1-37, January.
    13. Yashiv, Eran, 2016. "Aggregate hiring and the value of jobs along the business cycle," LSE Research Online Documents on Economics 86175, London School of Economics and Political Science, LSE Library.
    14. Hahn, Joyce K. & Hyatt, Henry R. & Janicki, Hubert P., 2021. "Job ladders and growth in earnings, hours, and wages," European Economic Review, Elsevier, vol. 133(C).
    15. Jonathon Hazell & Bledi Taska, 2020. "Downward Rigidity in the Wage for New Hires," Discussion Papers 2028, Centre for Macroeconomics (CFM).
    16. Borowczyk-Martins, Daniel & Lalé, Etienne, 2020. "The ins and outs of involuntary part-time employment," Labour Economics, Elsevier, vol. 67(C).
    17. Cristiano Cantore & Filippo Ferroni & Miguel León-Ledesma, 2021. "The Missing Link: Monetary Policy and The Labor Share," Journal of the European Economic Association, European Economic Association, vol. 19(3), pages 1592-1620.
    18. Koenig, Felix & Manning, Alan & Petrongolo, Barbara, 2014. "Reservation wages and the wage flexibility puzzle," LSE Research Online Documents on Economics 60613, London School of Economics and Political Science, LSE Library.
    19. Stefania Albanesi & Aysegul Sahin, 2018. "The Gender Unemployment Gap," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 30, pages 47-67, October.
    20. Patrick Kehoe & Elena Pastorino & Pierlauro Lopez & Virgiliu Midrigan, 2018. "Asset Prices and Unemployment Fluctuations," 2018 Meeting Papers 1119, Society for Economic Dynamics.

    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:een:camaaa:2020-15. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Cama Admin (email available below). General contact details of provider: https://edirc.repec.org/data/asanuau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.