Wage and Employment Cyclicalities at the Establishment Level

Arbeitspapier

We document substantial cross-sectional heterogeneity of German establishments' real wage cyclicality over the business cycle. While wages of the median establishment are moderately procyclical, 36 percent of establishments have countercyclical wages. We estimate a negative connection between establishments' wage cyclicality and their employment cyclicality, thereby providing a benchmark for quantitative macroeconomic models. We propose and calibrate a labor market flow model to match various empirical facts and to perform counterfactual exercises. If all establishments behaved as the most procyclical ones, labor market amplification would drop by one-third. If all followed Nash bargaining, it would drop by more than two-thirds.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 9283

Classification and Topics

• Classification: Wirtschaft ; Business Fluctuations; Cycles ; Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity ; Unemployment: Models, Duration, Incidence, and Job Search
• Subject: wage cyclicality ; employment cyclicality ; labor market flow model ; labor market dynamics ; establishments ; administrative data

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Merkl, Christian ; Stüber, Heiko
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/245464
• Last update: 10.03.2025, 11:42 AM CET