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Wage Cyclicality and Labor Market Sorting

Author

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  • Ana Figueiredo

Abstract

This paper uses a measure of skill mismatch to separate wage flexibility from confounding variation in wages driven by differences in job quality over the business cycle. I first show that the high cyclicality of job switchers' wages goes beyond cyclical movements in skill mismatch. Then I uncover large differences in wage cyclicality across the skill mismatch distribution. Among incumbent workers, wages are acyclical in good matches but procyclical in poor matches, in particular for overqualified workers.

Suggested Citation

  • Ana Figueiredo, 2022. "Wage Cyclicality and Labor Market Sorting," American Economic Review: Insights, American Economic Association, vol. 4(4), pages 425-442, December.
    • Handle: RePEc:aea:aerins:v:4:y:2022:i:4:p:425-42
    DOI: 10.1257/aeri.20210161
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    Cited by:

    1. Hartley, Jonathan S. & Olson, Matthew A., 2023. "Wage Cyclicality and Labor Market Sorting: Comment," I4R Discussion Paper Series 78, The Institute for Replication (I4R).

    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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