Real Wages over the Business Cycle
The real wage is acyclical. This fact is inconsistent with standard theories which assume a single shock drives the cycle and predict either a strong pro or countercyclical real wage. This paper tests the hypothesis that the real wage is acyclical because there are several shocks, some with opposing effects on the real wage, driving the business cycle. We find evidence in support of this hypothesis. In particular, we find real wages are procyclical in response to labor demand shocks and countercyclical in response to labor supply, aggregate demand and oil price shocks with the strongest countercyclical movements arising from aggregate demand.
Volume (Year): 23 (1997)
Issue (Month): 3 (Summer)
|Contact details of provider:|| Postal: |
Phone: (201) 684-7346
Web page: http://www.ramapo.edu/eea/journal.html
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:eej:eeconj:v:23:y:1997:i:3:p:277-291. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Victor Matheson, College of the Holy Cross)
If references are entirely missing, you can add them using this form.