Why Does the Cyclical Behavior of Real Wages Change Over Time?

Sources of macroeconomic fluctuations: A regime-switching DSGE approach

“…Obtaining complete risk-sharing among households in different wage-setting cohorts does not rely on the existence of such (implicit) financial arrangements. As shown byHuang, Liu, and Phaneuf (2004), the same equilibrium dynamics can be obtained in a model with a representative household (and thus complete insurance) consisting of a large number of worker members. The workers supply their homogenous labor skill to a large number of employment agencies, who transform the homogenous skill into differentiated skills and set nominal wages in a staggered fashion.…”

What Determines Corruption? International Evidence From Microdata

“…In contrast, if nongovernment real wages are countercyclical, a recession would be coupled with decreased relative wages of government workers and the impact on the propensity to ask for a bribe could be positive. Cyclical behavior of real wages is still debated (Bils and McLaughlin 2001;Chrinko 1980;Huang, Liu, and Phaneuf 2004;Mocan andTopyan 1993, Rotemberg 2006;Sumner andSilver1989). In addition,if highunemployment is anindication of structurally high joblessness, and if this is correlated with bad governance and low probability of detection and punishmentof bribery, unemployment may bepositively correlatedwiththeincidenceofcorruption.Notethatthedataset does not allow for a differentiation between structural and cyclical unemployment effects.…”

Keynesian Controversies on Wages

“…22 The research using the wages of individual workers highlights the difficulties in discriminating among age effects on workers' wages, cohort effects on wages and macroeconomic (or calendar year) effects on wages without critical identifying restrictions. Indeed, one important study making use of longitudinal observations of individual workers from the Panel Study of Income Dynamics rejects a spot markets model of labour markets on which much macroeconomic research relies because, in 17 Evidence of differences over calendar time in the movements of real wages over the cycle is supplied by Bernanke and Powell (1986), Hanes (1996), Basu and Taylor (1999) and Huang et al (2004). 18 Otani (1978), Kennan (1988) and Liu (2003), among others, report differences across countries in the movements of real wages over the cycle.…”