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Real Wages over the Business Cycle: OECD Evidence from the Time and Frequency Domains

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  • Julian Messina
  • Chiara Strozzi
  • Jarkko Turunen

Abstract

We study differences in the adjustment of aggregate real wages in the manufacturing sector over the business cycle across OECD countries, combining results from different data and dynamic methods. Summary measures of cyclicality show genuine cross-country heterogeneity even after controlling for the impact of data and methods. We find that more open economies and countries with stronger unions tend to have less pro-cyclical (or more counter-cyclical) wages. We also find a positive correlation between the cyclicality of real wages and employment, suggesting that policy complementarities may influence the adjustment of both quantities and prices in the labour market.

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Paper provided by FEDEA in its series Working Papers with number 2009-02.

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Date of creation: Jan 2009
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Handle: RePEc:fda:fdaddt:2009-02

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Cited by:
  1. Cervini-Plá, María & Silva, José I. & López-Villavicencio, Antonia, 2012. "Labor disruption costs and real wages cyclicality," MPRA Paper 42366, University Library of Munich, Germany.
  2. Andrea Bassanini, 2011. "Aggregate Earnings and Macroeconomic Shocks: The Role of Labour Market Policies and Institutions," OECD Social, Employment and Migration Working Papers 123, OECD Publishing.
  3. Marczak, Martyna & Beissinger, Thomas, 2010. "Real wages and the business cycle in Germany," FZID Discussion Papers 20-2010, University of Hohenheim, Center for Research on Innovation and Services (FZID).
  4. Girardi, Riccardo & Paruolo, Paolo, 2013. "Wages and prices in Europe before and after the onset of the Monetary Union," Economic Modelling, Elsevier, Elsevier, vol. 35(C), pages 643-653.
  5. Fidrmuc, Jarko & Korhonen, Iikka & Bátorová, Ivana, 2008. "China in the world economy: Dynamic correlation analysis of business cycles," BOFIT Discussion Papers, Bank of Finland, Institute for Economies in Transition 7/2008, Bank of Finland, Institute for Economies in Transition.
  6. Torben M. Andersen & Michael Svarer, 2009. "Business Cycle Dependent Unemployment Insurance," Kiel Working Papers 1498, Kiel Institute for the World Economy.
  7. Chandranath Amarasekara & George J. Bratsiotis, 2012. "Monetary policy and real wage cyclicality," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 44(33), pages 4391-4408, November.
  8. Heinz, Frigyes Ferdinand & Rusinova, Desislava, 2011. "How flexible are real wages in EU countries? A panel investigation," Working Paper Series, European Central Bank 1360, European Central Bank.
  9. Jan Babecky & Kamil Dybczak, 2012. "Real Wage Flexibility in the European Union: New Evidence from the Labour Cost Data," Working Papers, Czech National Bank, Research Department 2012/01, Czech National Bank, Research Department.
  10. Svatopluk Kapounek & Jitka Pomenkova, 2012. "The Endogeneity of Optimum Currency Areas Criteria in the Context of Financial Crisis: Evidence from Time-Frequency Domain Analysis," MENDELU Working Papers in Business and Economics, Mendel University in Brno, Faculty of Business and Economics 2012-31, Mendel University in Brno, Faculty of Business and Economics.
  11. Rhee, Hyuk-jae & Turdaliev, Nurlan, 2013. "Optimal monetary policy in a small open economy with staggered wage and price contracts," Journal of International Money and Finance, Elsevier, Elsevier, vol. 37(C), pages 306-323.
  12. Köllő, János, 2010. "Vállalati reakciók a gazdasági válságra, 2008-2009
    [Corporate reactions to the economic crisis, 2008-9]
    ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 1045-1064.
  13. Marczak, Martyna & Gómez, Víctor, 2012. "Cyclicality of real wages in the USA and Germany: New insights from wavelet analysis," FZID Discussion Papers 50-2012, University of Hohenheim, Center for Research on Innovation and Services (FZID).
  14. Karoly Fazekas & Gyorgy Molnar (ed.), 2011. "The Hungarian Labour Market 2011," The Hungarian Labour Market Yearbooks, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences, number 2011, January.

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