Why Are Wages Cyclical in the 1970s?
This article investigates cyclicity in real wages between 1969 and 1982 using Panel Study of Income Dynamics data. There is little evidence that movements in and out of the labor market induced aggregate wage cyclicity during these years. However, cyclicity in the movement of workers between heterogeneous labor-market sectors affected aggregate wage cyclicity. While sector location is important, sector selectivity is not correlated with wages. Yet, even within sectors, cyclicity is present in real wages over this time period and is the result of cyclicity in overall wage levels, as well as in the coefficients associated with particular worker characteristics. Copyright 1990 by University of Chicago Press.
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