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Cyclical labor costs within jobs

Schaefer, D. and Singleton, C. (2019) Cyclical labor costs within jobs. European Economic Review, 120. 103317. ISSN 0014-2921

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To link to this item DOI: 10.1016/j.euroecorev.2019.103317


Using UK employer-employee panel data, we present novel facts on how wages and working hours respond to the business cycle within jobs. Firms reacted to the Great Recession with substantial real wage cuts and by recruiting more part-time workers. A one percentage point increase in the unemployment rate led to an average decline in real hourly wages of 2.6 percent for new hires as well as for job stayers. Hiring hours worked were substantially procyclical, while job-stayer hours were acyclical. These results show that real wages are not rigid and that the labor costs of new hires are especially flexible.

Item Type:Article
Divisions:Faculty of Arts, Humanities and Social Science > School of Politics, Economics and International Relations > Economics
ID Code:86272
Uncontrolled Keywords:Wage rigidity; Great Recession; Hours worked; Job-level analysis

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