REAL WAGE CYCLICALITY IN THE PANEL STUDY OF INCOME DYNAMICS

In: Scottish journal of political economy: the journal of the Scottish Economic Society, Band 54, Heft 5, S. 617-647

Abstract

ABSTRACTPrevious studies of real wage cyclicality have made only sparing use of the micro‐data detail that is available in the Panel Study of Income Dynamics (PSID). The present paper brings to bear this additional detail to investigate the robustness of the previous results and to examine whether there are important cross‐sectional and demographic differences in wage cyclicality. Although real wages were procyclical across the entire distribution of workers from 1967 to 1991, the wages of lower‐income, younger, and less‐educated workers exhibited greater procyclicality. However, workers' straight‐time hourly pay rates have been acyclical, suggesting that more variable pay margins such as bonuses, overtime, late shift premia, and commissions have played a substantial if not primary role in generating procyclicality.