Cohort Effects in Wages and Promotions
This paper studies the long-term effect of business cycle, employment rate and employment growth rate on later wages and promotions. Using Swedish employer-employee match data, we find that workers who enter the labor market during a recovery phase of a business cycle (when the employment rate is still low but employment growth is high) receive higher-than-average wages in the long-run. However, these long-term effects on wages are almost entirely driven by the differences in promotion speeds between cohorts. Workers starting in a recovery period are hired into slightly lower ranks, but are promoted at a higher speed than comparable workers during a contraction period. Simple theoretical models based on downward rigidity of wages and promotions, long-term contract, or stigma cannot explain a broad pattern of our findings, but models based on human capital, matching, and cyclical hiring can.
|Date of creation:||Dec 2007|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (650) 725-1874
Fax: (650) 723-8611
Web page: http://siepr.stanford.edu
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:sip:dpaper:07-025. 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: (Anne Shor)
If references are entirely missing, you can add them using this form.