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Real wages over the business cycle: OECD evidence from the time and frequency domains

  • Messina, Julian
  • Strozzi, Chiara
  • Turunen, Jarkko

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 labor market.

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Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 33 (2009)
Issue (Month): 6 (June)
Pages: 1183-1200

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Handle: RePEc:eee:dyncon:v:33:y:2009:i:6:p:1183-1200
Contact details of provider: Web page: http://www.elsevier.com/locate/jedc

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