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  3. American Economic Review
  4. May 2017
  5. The Relative Power of Employment-to-Employment Reallocation and Unemployment Exits in Predicting Wage Growth

The Relative Power of Employment-to-Employment Reallocation and Unemployment Exits in Predicting Wage Growth

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Abstract

We study the cyclical comovement nominal wage growth (either monthly earnings or hourly wage rate) and labor market flows. We use microdata from the Survey of Income and Program Participation over 1996-2013 to purge composition effects in worker and job characteristics and to isolate the reallocative effect of Employer-to-Employer (EE) transitions. We find an "EE wage Phillips curve": wage inflation comoves positively with EE as strongly as with the employment rate. This correlation holds for job stayers; we interpret the EE rate as a measure of labor demand. We find no analogous evidence for the job-finding rate from unemployment.

Citation

Moscarini, Giuseppe, and Fabien Postel-Vinay. 2017. "The Relative Power of Employment-to-Employment Reallocation and Unemployment Exits in Predicting Wage Growth." American Economic Review, 107 (5): 364-68. DOI: 10.1257/aer.p20171078

Additional Materials

JEL Classification

  • E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
  • E32 Business Fluctuations; Cycles
  • J23 Labor Demand
  • J31 Wage Level and Structure; Wage Differentials
  • J64 Unemployment: Models, Duration, Incidence, and Job Search