Wage Cyclicality and Labour Market Institutions

Arbeitspapier

Do labour institutions influence how wages respond to the business cycle? Such responsiveness can then shape several economic outcomes, including unemployment. In this paper, we examine the role of two key labour market institutions - collective bargaining and temporary contracts - upon wage cyclicality. Our evidence is drawn from rich, 2002-2020 matched data from Portugal. We find that workers not covered by collective agreements exhibit much higher wage cyclicality, especially if new hires, compared to covered workers. In contrast, workers under fixed-term contracts do not exhibit sizable differences in cyclicality compared to counterparts under open-ended contracts. Our findings highlight a novel angle through which labour institutions influence the labour market and the economy.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 16787

Classification and Topics

• Classification: Wirtschaft ; Wage Level and Structure; Wage Differentials ; Dispute Resolution: Strikes, Arbitration, and Mediation; Collective Bargaining
• Subject: real wages ; business cycles ; collective bargaining ; temporary contracts ; matched data

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Pereira, João ; Ramos, Raul ; Martins, Pedro S.
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2024