Working Paper: NBER ID: w12262
Authors: Donggyun Shin; Gary Solon
Abstract: In the most thorough study to date on wage cyclicality among job stayers, Devereux's (2001) analysis of men in the Panel Study of Income Dynamics produced two puzzling findings: (1) the real wages of salaried workers are noncyclical, and (2) wage cyclicality among hourly workers differs between two alternative wage measures. We examine these puzzles with additional evidence from other sources. Devereux's finding of noncyclical real wages among salaried job stayers is not replicated in the National Longitudinal Survey of Youth data. The NLSY data, however, do corroborate his finding of a discrepancy for hourly workers between the cyclicality of the two alternative wage measures. Evidence from the PSID Validation Study contradicts Devereux's conjecture that the discrepancy might be due to a procyclical bias from measurement error in average hourly earnings. Evidence from the Bureau of Labor Statistics establishment survey supports his hypothesis that overtime work accounts for part (but not all) of the discrepancy. We conclude that job stayers' real average hourly earnings are substantially procyclical and that an important portion of that procyclicality probably is due to compensation beyond base wages.
Keywords: wage cyclicality; employer-employee matches; real wages
JEL Codes: E3; J3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| salaried job stayers' real wages (J31) | noncyclical (E32) |
| hourly workers' average hourly earnings (J31) | procyclical (E32) |
| reported hourly wage (J31) | little cyclicality (E32) |
| overtime pay (J33) | discrepancy in cyclicality (E32) |
| real average hourly earnings (J31) | procyclical (E32) |