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Wage Cyclicality Across Time and Frequencies

Srinivasan Murali and Shweta Sogani
2023
Working Paper No
681
Body

This paper documents how the cyclicality of real wages has evolved over time and across different frequencies in the US. We use individual level data from the CPS to construct composition bias corrected wage series at a quarterly frequency. Utilizing continuous wavelet tools, we find that the cyclicality of wages for all the workers as well as new hires has increased over time, and this increase is prevalent across all the frequencies. Further, the increase in cyclicality is primarily concentrated among the workers with less than college education. This decline in wage
rigidity over the business cycle relates to broader structural changes in the labour market and has implications for labour search framework.

Key words
Wavelets, Wage cyclicality, Wage rigidity, Time-frequency analysis
WP No. 681.pdf (1.5 MB)

Wage Cyclicality Across Time and Frequencies

Author(s) Name: Srinivasan Murali and Shweta Sogani, 2023
Working Paper No : 681
Abstract:

This paper documents how the cyclicality of real wages has evolved over time and across different frequencies in the US. We use individual level data from the CPS to construct composition bias corrected wage series at a quarterly frequency. Utilizing continuous wavelet tools, we find that the cyclicality of wages for all the workers as well as new hires has increased over time, and this increase is prevalent across all the frequencies. Further, the increase in cyclicality is primarily concentrated among the workers with less than college education. This decline in wage
rigidity over the business cycle relates to broader structural changes in the labour market and has implications for labour search framework.

Keywords: Wavelets, Wage cyclicality, Wage rigidity, Time-frequency analysis
WP No. 681.pdf (1.5 MB)