Wages, compositional effects and the business cycle

Título: Wages, compositional effects and the business cycle
Resumen:Durante la Gran Recesión, el desempleo aumentó sustancialmente en varios países de la zona del euro, mientras que los salarios mostraron una respuesta moderada. Dado que los trabajadores poco cualificados son los primeros en perder su empleo durante una recesión, los trabajadores empleados restantes forman una reserva de empleo relativamente más cualificada. Este cambio en la composición de los trabajadores empleados incide mecánicamente en el salario agregado, incluso en el caso de que no se produzcan aumentos salariales. Este trabajo utiliza datos a nivel individual para controlar el efecto de los cambios en la composición de los trabajadores sobre los salarios y la periodicidad de los mismos.
Summary:During the Great Recession, unemployment increased substantially across several euro area countries, with wages exhibiting a muted response. As low skilled workers lose their jobs first during a recession, the remaining employed workers result in a relatively more skilled employment pool. This change in the composition of the employed workers in ates the aggregate wage mechanically, even in the case of no actual pay rises. This paper uses individual level data to control for the effect of changes in the composition of workers on wages and wage cyclicality. We find that compositional effects are highly correlated with the severity of the business cycle, being significant in countries where employment losses were larger. Thus, the results partially explain the muted response of the observed wages to the business cycle, as wages decreased more than what the aggregate numbers suggest during the downturn, a picture that is reversed somewhat during the recent recovery.

Fecha publicación: 02-05-2022
Autor: Banco Central Europeo
ISBN / ISSN: 978-92-899-4986-6 / 1725-2806
Link: https://bit.ly/3OXvODA
Palabras clave: ciclo económico , empresa , mercado laboral , recesión económica , recuperación económica , salario , zona euro
Keywords: economic cycle , economic recession , economic recovery , euro area , labour market , pay , type of business