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Real Wages and the Business Cycle: Accounting for Worker, Firm, and Job Title Heterogeneity

Author

Listed:
  • Anabela Carneiro
  • Paulo Guimarães
  • Pedro Portugal
Abstract
Using a longitudinal matched employer-employee dataset for Portugal over the 1986-2007 period, this study analyzes the wage responses to aggregate labor market conditions for newly hired workers and existing workers within the same firm. Accounting for worker, firm, and job title heterogeneity, the data support the hypothesis that entry wages are more procyclical than wages of stayers. A one point increase in the unemployment rate decreases wages of newly hired workers within a given firm-job title by around 2.7 percent and by 2.2 percent for stayers within the same firm-job title. Finally, the results reveal a one-for-one wage response to changes in labor productivity. (JEL: E24, E32, J64)

Suggested Citation

  • Anabela Carneiro & Paulo Guimarães & Pedro Portugal, 2012. "Real Wages and the Business Cycle: Accounting for Worker, Firm, and Job Title Heterogeneity," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(2), pages 133-152, April.
    • Handle: RePEc:aea:aejmac:v:4:y:2012:i:2:p:133-52
    Note: DOI: 10.1257/mac.4.2.133
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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. Real Wages and the Business Cycle: Accounting for Worker, Firm, and Job Title Heterogeneity (AEJ:MA 2012) in ReplicationWiki

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