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Reconciling the divergence in aggregate U.S. wage series

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  • Champagne, Julien
  • Kurmann, André
  • Stewart, Jay

Abstract

Average hourly wages from the Labor Productivity and Costs (LPC) program, the Current Population Survey (CPS) and the Current Employment Statistics (CES) survey have diverged, both in trend and volatility. Supplements and irregular earnings of high-income workers, included in the LPC but not in the two other datasets, have grown more rapidly and have become more volatile, accounting for most of the divergence between LPC and CPS earnings. The more restrictive worker coverage in the CES explains a large part of the divergence between CPS and CES earnings. The results have important implications for the choice of wage series in macroeconomic analysis.

Suggested Citation

  • Champagne, Julien & Kurmann, André & Stewart, Jay, 2017. "Reconciling the divergence in aggregate U.S. wage series," Labour Economics, Elsevier, vol. 49(C), pages 27-41.
    • Handle: RePEc:eee:labeco:v:49:y:2017:i:c:p:27-41
    DOI: 10.1016/j.labeco.2017.08.002
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    Cited by:

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    6. Julien Champagne, 2015. "The Carrot and the Stick: The Business Cycle Implications of Incentive Pay in the Labor Search Model," Staff Working Papers 15-35, Bank of Canada.
    7. Henry R. Hyatt & Tucker S. McElroy, 2017. "Labor Reallocation, Employment, and Earnings: Vector Autoregression Evidence," Working Papers 17-11r, Center for Economic Studies, U.S. Census Bureau.

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    More about this item

    Keywords

    Wages and salaries; Supplements; Irregular earnings; Worker coverage; Divergence in trend and volatility;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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