The cyclical behavior of real wages has evolved from mildly countercyclical during the interwar period to modestly procyclical in the postwar era. This paper presents a general-equilibrium business-cycle model that helps explain the evolution. In the model, changes in the real wage cyclicality arise from interactions between nominal wage and price rigidities and an evolving input-output structure.
Huang, Kevin X.D., Zheng Liu and Louis Phaneuf.
2004."Why Does the Cyclical Behavior of Real Wages Change Over Time?."American Economic Review,
94(4): 836-856.DOI: 10.1257/0002828042002552