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Changes in the Cyclical Sensitivity of Wages in the United States, 1891-1987

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  • Allen, Steven G.

Abstract

The conventional wisdom among economists today is that wages have become less sensitive to aggregate economic conditions, mainly because of changes in labor market structure and changes in wage contracting mechanisms brought about by countercyclical policy and social insurance. This is re-examined here by using a wider range of data sets and a longer time frame than in any previous study and by paying close attention to differences in the way the prewar and postwar wage series were constructed and the effects of aggregation across industries. The results show that the response of nominal wages to unemployment and output, conditional on previous inflation, is about the same today as it was 100 years ago.

Suggested Citation

  • Allen, Steven G., 1989. "Changes in the Cyclical Sensitivity of Wages in the United States, 1891-1987," Department of Economics and Business - Archive 259452, North Carolina State University, Department of Economics.
    • Handle: RePEc:ags:ncbuar:259452
    DOI: 10.22004/ag.econ.259452
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    References listed on IDEAS

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