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Wage Flexibility and Employment Fluctuations: Evidence from the Housing Sector

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  • Jörn Pischke

Abstract

This paper compares three occupations in the housing sector with very different wage setting institutions, real estate agents, architects, and construction workers. It studies the wage and employment responses of these occupations to the housing cycle, a proxy for labour demand shocks to the industry. The employment of real estate agents, whose pay is far more flexible than the other occupations, indeed reacts less to the cycle than employment in the other occupations. However, unless labour demand elasticities are large, the estimates do not suggest that the level of wage flexibility enjoyed by real estate agents would buffer employment fluctuations in response to demand shocks by more than 10 to 20 percent compared to completely rigid wages. [Working Paper 22496]

Suggested Citation

  • Jörn Pischke, 2016. "Wage Flexibility and Employment Fluctuations: Evidence from the Housing Sector," Working Papers id:11191, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:11191
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    Cited by:

    1. Adamopoulou, Effrosyni & Díez-Catalán, Luis & Villanueva, Ernesto, 2025. "Staggered contracts and unemployment during recessions," Journal of Monetary Economics, Elsevier, vol. 156(C).
    2. Reizer, Balázs, 2022. "Employment and Wage Consequences of Flexible Wage Components," Labour Economics, Elsevier, vol. 78(C).
    3. Liao, Shushu, 2021. "The effect of credit shocks in the context of labor market frictions," Journal of Banking & Finance, Elsevier, vol. 125(C).
    4. Sergei Guriev & Biagio Speciale & Michele Tuccio, 2019. "How do Regulated and Unregulated Labor Markets Respond to Shocks? Evidence from Immigrants During the Great Recession," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 35(1), pages 37-76.
    5. Anne Kathrin Funk & Daniel Kaufmann, 2022. "Do Sticky Wages Matter? New Evidence from Matched Firm Survey and Register Data," Economica, London School of Economics and Political Science, vol. 89(355), pages 689-712, July.
    6. Karolina Konopczak, 2019. "Modelling labour adjustments over the business cycle: evidence from non-linear ARDL model," MF Working Papers 35, Ministry of Finance in Poland.
    7. Jackson, Laura E. & Kurt, Ezgi, 2025. "Downward wage rigidity and asymmetric effects of monetary policy," Journal of Macroeconomics, Elsevier, vol. 83(C).
    8. Wataru Hirata & Toshitaka Maruyama & Tomohide Mineyama, 2020. "Flattening of the Wage Phillips Curve and Downward Nominal Wage Rigidity: The Japanese Experience in the 2010s," Bank of Japan Working Paper Series 20-E-4, Bank of Japan.
    9. Maryam Akbari Nasiri, 2020. "How Long Do Housing Cycles Last? A Duration Analysis For Emerging Economies," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 23(2), pages 179-200, July.
    10. Effrosyni Adamopoulou & Emmanuele Bobbio & Marta De Philippis & Federico Giorgi, 2016. "Wage rigidities and business cycle fluctuations: a linked employer-employee analysis," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-32, December.
    11. de Ridder, M. & Pfajfar, D., 2017. "Policy Shocks and Wage Rigidities: Empirical Evidence from Regional Effects of National Shocks," Cambridge Working Papers in Economics 1717, Faculty of Economics, University of Cambridge.
    12. Wix, Carlo, 2017. "The long-run real effects of banking crises: Firm-level investment dynamics and the role of wage rigidity," SAFE Working Paper Series 189, Leibniz Institute for Financial Research SAFE.
    13. Konopczak, Karolina, 2021. "Modelling labour adjustments over the business cycle using asymmetric cointegration," The Journal of Economic Asymmetries, Elsevier, vol. 23(C).

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    JEL classification:

    • N0 - Economic History - - General

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