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A cross-country comparison of the cyclicality of real wages

Author

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  • Haoming Liu

Abstract

This paper contains the first cross-country comparison of the cyclical behaviour of real wages using microdata. After controlling for changes in labour quality, I find that real wages are strongly procyclical in Canada, the United Kingdom, and the United States. In contrast, the cyclicality of government-published real aggregate hourly wages varies substantially across these three countries. The disparity suggests that a direct comparison of the cyclical behaviour of real aggregate wages is misleading. Finally, I show that variations in labour quality also bias the cross-country correlation of several key labour market variables.

Suggested Citation

  • 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.
    • Handle: RePEc:cje:issued:v:36:y:2003:i:4:p:923-948
    DOI: 10.1111/1540-5982.t01-3-00007
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    Cited by:

    1. Chassamboulli, Andri, 2013. "Labor-market volatility in a matching model with worker heterogeneity and endogenous separations," Labour Economics, Elsevier, vol. 24(C), pages 217-229.
    2. Chandranath Amarasekara & George J. Bratsiotis, 2012. "Monetary policy and real wage cyclicality," Applied Economics, Taylor & Francis Journals, vol. 44(33), pages 4391-4408, November.
    3. Michael W. L. Elsby & Donggyun Shin & Gary Solon, 2016. "Wage Adjustment in the Great Recession and Other Downturns: Evidence from the United States and Great Britain," Journal of Labor Economics, University of Chicago Press, vol. 34(S1), pages 249-291.
    4. Xin Xu & Robert Kaestner, 2010. "The Business Cycle and Health Behaviors," NBER Working Papers 15737, National Bureau of Economic Research, Inc.
    5. Ulrich Woitek, 2004. "Real Wages and Business Cycle Asymmetries," CESifo Working Paper Series 1206, CESifo.
    6. Xu, Xin, 2013. "The business cycle and health behaviors," Social Science & Medicine, Elsevier, vol. 77(C), pages 126-136.
    7. Seonyoung Park & Donggyun Shin, 2019. "Inflation And Wage Rigidity/Flexibility In The Short Run," Economic Inquiry, Western Economic Association International, vol. 57(3), pages 1675-1697, July.
    8. Seonyoung Park & Donggyun Shin, 2019. "Inflation And Wage Rigidity/Flexibility In The Short Run," Economic Inquiry, Western Economic Association International, vol. 57(3), pages 1675-1697, July.

    More about this item

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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