Merkl C, Stüber H (2024)
Publication Type: Journal article, Original article
Publication year: 2024
Book Volume: 161
Article Number: 104636
Journal Issue: 104636
DOI: 10.1016/j.euroecorev.2023.104636
Although the quantitative relationship between employment cyclicality and wage cyclicality is central for the dynamics of macroeconomic models, there is little empirical evidence on this topic. We use the German AWFP dataset to document that wage cyclicalities are very heterogeneous across establishments. Based on this heterogeneity, we estimate the relationship between employment cyclicality and wage cyclicality at the establishment level. We use this micro-estimate as a calibration target for a macro labor market flow model with heterogeneous wage dynamics that nests the standard search and matching model. Based on this micro-macro linkage, we provide a new quantitative benchmark for the role of wage rigidity in search and matching models. Furthermore, we show that acyclical and countercyclical wage establishments are key drivers for stronger labor market reactions in recessions than in booms.
APA:
Merkl, C., & Stüber, H. (2024). Wage and employment cyclicalities at the establishment level. European Economic Review, 161(104636). https://doi.org/10.1016/j.euroecorev.2023.104636
MLA:
Merkl, Christian, and Heiko Stüber. "Wage and employment cyclicalities at the establishment level." European Economic Review 161.104636 (2024).
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