Nominal Wage Adjustments during the Pandemic Recession

2021 ◽  
Vol 111 ◽  
pp. 258-262
Author(s):  
John Grigsby ◽  
Erik Hurst ◽  
Ahu Yildirmaz ◽  
Yulia Zhestkova
Keyword(s):  
Great Recession ◽  
Labor Demand ◽  
Wage Distribution ◽  
Nominal Wage ◽  
The Great Recession ◽  
Wage Cuts

In this paper, we show that the pandemic recession has led to frequent cuts in nominal wages. Within three months in 2020, as many wage cuts had occurred as occurred throughout the Great Recession. Unlike employment declines, wage cuts were concentrated at the top of the wage distribution. However, these cuts have been relatively short lived, particularly among high earners. Finally, wage cuts have been concentrated in firms that have seen large employment declines. Wage cuts appear not to be a substitute for cutting employment, at least when the shock to labor demand is this large.

scholarly journals Immigrants Equilibrate Local Labor Markets: Evidence from the Great Recession

2016 ◽  
Vol 8 (1) ◽  
pp. 257-290 ◽  
Author(s):  
Brian C. Cadena ◽  
Brian K. Kovak
Keyword(s):  
Labor Markets ◽  
Geographic Variation ◽  
Great Recession ◽  
Labor Demand ◽  
Employment Outcomes ◽  
Local Labor Markets ◽  
The Great Recession ◽  
Native Workers ◽  
Spatial Differences ◽  
Employment Probabilities

This paper demonstrates that low-skilled Mexican-born immigrants' location choices respond strongly to changes in local labor demand, which helps equalize spatial differences in employment outcomes for low-skilled native workers. We leverage the substantial geographic variation in labor demand during the Great Recession to identify migration responses to local shocks and find that low-skilled Mexican-born immigrants respond much more strongly than low-skilled natives. Further, Mexican mobility reduced the incidence of local demand shocks on natives, such that those living in metro areas with a substantial Mexican-born population experienced a roughly 50 percent weaker relationship between local shocks and local employment probabilities. (JEL E32, J15, J23, J24, J61, R23)

scholarly journals Comparing Real Wage Rates

2012 ◽  
Vol 102 (2) ◽  
pp. 617-642 ◽  
Author(s):  
Orley Ashenfelter
Keyword(s):  
Great Recession ◽  
Real Wage ◽  
Wage Rate ◽  
Preliminary Analysis ◽  
Living Standards ◽  
Nominal Wage ◽  
Important Indicator ◽  
The Great Recession ◽  
Wage Rates ◽  
Real Wage Rate

A real wage rate is a nominal wage rate divided by the price of a good and is a transparent measure of how much of the good an hour of work buys. It provides an important indicator of the living standards of workers, and also of the productivity of workers. In this paper I set out the conceptual basis for such measures, provide some historical examples, and then provide my own preliminary analysis of a decade long project designed to measure the wages of workers doing the same job in over 60 countries—workers at McDonald's restaurants. The results demonstrate that the wage rates of workers using the same skills and doing the same jobs differ by as much as 10 to 1, and that these gaps declined over the period 2000–2007, but with much less progress since the Great Recession. (JEL C81, C82, D24, J31, N30, O57)

The wage gap in Spain for temporary workers: the effects of the Great Recession

2019 ◽  
Vol 40 (7) ◽  
pp. 1319-1346
Author(s):  
Xisco Oliver ◽  
Maria Sard
Keyword(s):  
Great Recession ◽  
Wage Gap ◽  
Least Square ◽  
Wage Distribution ◽  
Temporary Workers ◽  
Content Type ◽  
The Great Recession ◽  
Before And After ◽  
Ordinary Least Square Regression ◽  
Permanent Workers

Purpose The purpose of this paper is to analyse the wage gap between temporary and permanent workers across the whole wage distribution, not just at the mean, and the evolution before and after the Great Recession on this gap in Spain. Design/methodology/approach An extended Mincer-type wage equation is estimated using ordinary least square regression and unconditional quantile regression. Then, the decomposition of the wage gap between workers with fixed-term and permanent contracts for each quantile is made using the Fortin, Lemieux and Firpo decomposition. Findings The results show that two workers, with identical characteristics, earn different salaries if they have a different type of contract. However, the wage gap is not constant across the wage distribution. The penalty for temporary workers is wider for higher wages. Moreover, the main part of the gap is due to observed characteristics, but other factors (unobserved characteristics and discrimination) become more relevant in the upper part of the wage distribution. Originality/value The study expands upon available studies for Spain in two points. First, it is the first paper to the knowledge that analyse both the wage gap between temporary and permanent workers across the wage distribution and its decomposition. Second, the paper explores what happened before and after the Great Recession. In the years that the paper analyses there is also a labour market reform.

scholarly journals Nominal Wage Rigidity in Village Labor Markets

2019 ◽  
Vol 109 (10) ◽  
pp. 3585-3616 ◽  
Author(s):  
Supreet Kaur
Keyword(s):  
Labor Markets ◽  
Labor Demand ◽  
Wage Rigidity ◽  
Nominal Wage ◽  
New Approach ◽  
Market Effects ◽  
Transitory Shocks ◽  
Nominal Wage Rigidity ◽  
Wage Cuts ◽  
Local Rainfall

This paper develops a new approach to test for downward wage rigidity by examining transitory shocks to labor demand (i.e., rainfall) across 600 Indian districts. Nominal wages rise during positive shocks but do not fall during droughts. In addition, transitory positive shocks generate ratcheting: after they have dissipated, wages do not adjust back down. Ratcheting reduces employment by 9 percent, indicating that rigidities distort employment levels. Inflation, which is unaffected by local rainfall, enables downward real wage adjustments—offering causal evidence for its labor market effects. Surveys suggest that individuals believe nominal wage cuts are unfair and lead to effort reductions. (JEL E24, E31, J23, J31, O15, O18, R23)

The ‘Great Recession’ and low pay in Europe

2017 ◽  
Vol 24 (3) ◽  
pp. 205-220 ◽  
Author(s):  
Carlos Vacas-Soriano
Keyword(s):  
Great Recession ◽  
Wage Distribution ◽  
Paid Work ◽  
Real Wages ◽  
The Great Recession ◽  
General Decline ◽  
Part Time ◽  
European Periphery ◽  
The Impact ◽  
Low Pay

This article contributes to the literature on low-paid work by analysing the shares of low-paid employment in the period 2006–2014 and the underlying causes. I use an inflation-adjusted low-pay threshold anchored at 60 percent of median wages to assess the impact of the Great Recession, which increased the share of low-paid employees in two-thirds of European countries and in the EU as a whole. This was driven by a general decline in real wages, which was particularly intense in European periphery countries and at the bottom of the wage distribution as well as among employees with shorter tenure. However, compositional effects either prevented a larger expansion of low-pay shares by masking the real extent of the wage correction or were generally negligible in driving low-pay shares. Moreover, growing part-time employment emerges as a significant source of low-paid work from the onset of the crisis.

scholarly journals Downward Nominal Wage Rigidity in the United States During and After the Great Recession

2020 ◽  
Vol 2020 (001r1) ◽  
Author(s):  
◽  
Bruce Fallick ◽  
Daniel Villar ◽  
William L. Wascher ◽  
◽  
...  
Keyword(s):  
United States ◽  
Great Recession ◽  
The United States ◽  
Wage Rigidity ◽  
Nominal Wage ◽  
The Great Recession ◽  
Nominal Wage Rigidity

scholarly journals Wage Growth after the Great Recession

2017 ◽  
pp. 1-6 ◽  
Author(s):  
Roberto Pinheiro ◽  
Meifeng Yang
Keyword(s):  
Labor Productivity ◽  
Great Recession ◽  
Wage Growth ◽  
Nominal Wage ◽  
Labor Share ◽  
The Great Recession ◽  
Expected Inflation ◽  
Show Evidence ◽  
Weak Growth ◽  
Labor's Share

Nominal wage growth since the Great Recession has been sluggish. We show that the sluggishness is due mostly to weak growth in labor productivity, as well as lower-than-expected inflation. We also find that wage growth since late 2014 has actually been above what would be consistent with realized labor-productivity growth and inflation, and this trend in wages reflects an increase in labor's share of income. We show evidence that this increase in the labor share may be due to a reversal of the trend to replace labor with capital.

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