Code for: "Wage Rigidity and Employment Outcomes: Evidence from Administrative Data"
Principal Investigator(s): View help for Principal Investigator(s) Gabriel Ehrlich, University of Michigan; Joshua Montes, Board of Governors of the Federal Reserve System
Version: View help for Version V1
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| Code | 10/28/2022 09:55:AM | ||
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application/pdf | 214.8 KB | 06/21/2023 10:58:AM |
Project Citation:
Ehrlich, Gabriel, and Montes, Joshua. Code for: “Wage Rigidity and Employment Outcomes: Evidence from Administrative Data.” Nashville, TN: American Economic Association [publisher], 2023. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2023-12-15. https://doi.org/10.3886/E182603V1
Project Description
Summary:
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This paper examines the relationship between downward nominal wage rigidity and employment outcomes using linked employer-employee data. Wage rigidity prevents 27.1 percent of counterfactual wage cuts, with a standard deviation of 19.2 percent across establishments. An establishment with the sample-average level of wage rigidity is predicted to have a 3.3 percentage point higher layoff rate, a 7.4 percentage point lower quit rate, and a 2.0 percentage point lower hire rate. Estimating a structural model by indirect inference implies that the cost of a nominal wage cut is 33 percent of an average worker’s annual compensation.
Scope of Project
JEL Classification:
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E20 Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy: General (includes Measurement and Data)
E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
J23 Labor Demand
J31 Wage Level and Structure; Wage Differentials
J63 Labor Turnover; Vacancies; Layoffs
E20 Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy: General (includes Measurement and Data)
E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
J23 Labor Demand
J31 Wage Level and Structure; Wage Differentials
J63 Labor Turnover; Vacancies; Layoffs
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