Workers' Flows and Real Wage Cyclicality

51 Pages Posted: 8 Mar 2007

See all articles by Anabela Jesus Moreira Carneiro

Anabela Jesus Moreira Carneiro

Universidade do Porto - Faculdade de Economia (FEP)

Pedro Portugal

Bank of Portugal - Research Department; New University of Lisbon; IZA Institute of Labor Economics

Date Written: February 2007

Abstract

This study investigates real wage cyclicality in Portugal for the years of 1986-98, addressing the heterogeneity in wages responses to aggregate labor market conditions for workers' hirings and separations. The results exhibit a moderate procyclical behavior of real wages for continuously employed workers, in particular, for job stayers. For workers' accessions a strongly procyclical behavior in wages was observed, which is consistent with the idea that entry wages are much more procyclical than current wages. This empirical evidence suggests that even micro-data estimates of real wage cyclicality may conceal a strong procyclical wage behavior, when heterogeneity on wages responses to aggregate conditions between employed workers and hirings and separations is not taken into account.

Keywords: wage cyclicality, hirings, separations

JEL Classification: D21, J30, J31

Suggested Citation

Carneiro, Anabela Jesus Moreira and Portugal, Pedro, Workers' Flows and Real Wage Cyclicality (February 2007). IZA Discussion Paper No. 2604, Available at SSRN: https://ssrn.com/abstract=969361

Anabela Jesus Moreira Carneiro (Contact Author)

Universidade do Porto - Faculdade de Economia (FEP) ( email )

Rua Roberto Frias
s/n
Porto, 4200-464
Portugal

Pedro Portugal

Bank of Portugal - Research Department ( email )

Av. Almirante Reis 71, 6th
Lisbon 1150-012
Portugal
+351 21 313 0000 (Phone)
+351 21 814 3841 (Fax)

New University of Lisbon

Lisbon, 1099-085
Portugal

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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