Amenities and wages over the business cycle: Dynamics and gender implications

While the cyclical behavior of wages is well studied, much less is known about how amenities vary over the business cycle. Using the IAB Job Vacancy Survey for Germany, we show that firms impose less demanding flexibility requirements in booms than in recessions. This cyclicality is concentrated among firms covered by collective agreements. Using worker-side data from the IAB PASS Survey, we further show that the rate at which interviews turn into jobs is procyclical. We propose a search-and-matching model with endogenous amenity provision and an endogenous job-realization probability. The model replicates the patterns from the data and shows that endogenous variation in job realization substantially amplifies labor-market fluctuations. Wage flexibility and amenity provision are substitutes: more procyclical wages lead to less countercyclical amenity provision. With heterogeneous workers, the job-realization probability of less flexible workers responds more strongly to aggregate shocks. Consistent with this model prediction, mothers' empirical job-realization probability is more cyclical than childless women's and men's, while their willingness to make concessions responds less to labor-market slack.