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The responsiveness of industry wages to low-frequency shocks in Canada

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  • David Gray
  • Hanqing Qiu

Abstract

The first objective of this paper is to examine the empirical relationship between low-frequency shocks to labour demand and average wages on an industrial basis using a Canadian longitudinal data set. We estimate a fixed-effects model that controls for workers' unobservable attributes. The second major objective is to extend the existing industry-based literature by estimating a specification allowing for a comparison between the degree of wage responsiveness of within-firm stayers and between-firm movers. The findings indicate that average wages by industry tend to respond positively to low frequency changes in employment, and that there is some degree of wage flexibility within firm-worker matches.

Suggested Citation

  • David Gray & Hanqing Qiu, 2010. "The responsiveness of industry wages to low-frequency shocks in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 43(4), pages 1221-1242, November.
    • Handle: RePEc:cje:issued:v:43:y:2010:i:4:p:1221-1242
    DOI: 10.1111/j.1540-5982.2010.01612.x
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    References listed on IDEAS

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    1. Paul J. Devereux, 2005. "Do Employers Provide Insurance against Low Frequency Shocks? Industry Employment and Industry Wages," Journal of Labor Economics, University of Chicago Press, vol. 23(2), pages 313-340, April.
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    8. Paul J. Devereux & Robert A. Hart, 2006. "Real Wage Cyclicality of Job Stayers, Within-Company Job Movers, and Between-Company Job Movers," ILR Review, Cornell University, ILR School, vol. 60(1), pages 105-119, October.
    9. Donggyun Shin & Gary Solon, 2007. "New Evidence On Real Wage Cyclicality Within Employer–Employee Matches," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(5), pages 648-660, November.
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    Cited by:

    1. Dany Brouillette & Olena Kostyshyna & Natalia Kyui, 2018. "Downward nominal wage rigidity in Canada: Evidence from micro-level data," Canadian Journal of Economics, Canadian Economics Association, vol. 51(3), pages 968-1002, August.
    2. Jones, Sam & Tarp, Finn, 2016. "Does foreign aid harm political institutions?," Journal of Development Economics, Elsevier, vol. 118(C), pages 266-281.
    3. Jones, Sam & Tarp, Finn, 2016. "Does foreign aid harm political institutions?," Journal of Development Economics, Elsevier, vol. 118(C), pages 266-281.

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    More about this item

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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