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Cyclical labor costs within jobs

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  • Schaefer, Daniel
  • Singleton, Carl

Abstract

Using UK employer-employee panel data, we present novel facts on how wages and working hours respond to the business cycle within jobs. Firms reacted to the Great Recession with substantial real wage cuts and by recruiting more part-time workers. A one percentage point increase in the unemployment rate led to an average decline in real hourly wages of 2.6% for new hires as well as for job stayers. Hiring hours worked were substantially procyclical, while job-stayer hours were acyclical. These results show that real wages are not rigid and that the labor costs of new hires are especially flexible.

Suggested Citation

  • Schaefer, Daniel & Singleton, Carl, 2019. "Cyclical labor costs within jobs," European Economic Review, Elsevier, vol. 120(C).
  • Handle: RePEc:eee:eecrev:v:120:y:2019:i:c:s0014292119301692
    DOI: 10.1016/j.euroecorev.2019.103317
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    Cited by:

    1. Daniel Schaefer & Carl Singleton, 2020. "Nominal Wage Adjustments and the Composition of Pay: New Evidence from Payroll Data," Economics Discussion Papers em-dp2020-01, Department of Economics, Reading University.

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    More about this item

    Keywords

    Wage rigidity; Great recession; Hours worked; Job-level analysis;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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