Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/171035 
Year of Publication: 
2017
Series/Report no.: 
IZA Discussion Papers No. 11051
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Using the new AWFP dataset that covers all German establishments, we document a substantial cross-sectional heterogeneity of establishments' average real wages over the business cycle. While the median establishments' real wages are procyclical, there is a large fraction of establishments with countercyclical real wages. We are the first to show that establishments with more procyclical wages have a less procyclical hires rate and employment behavior. We propose a labor market flow model that is able to replicate these facts and thereby allows us to run counterfactual exercises. When we set the wage cyclicalities of all establishments to the one of the most procyclical establishments, labor market volatilities drop by more than 50 percent.
Subjects: 
wage cyclicality
labor market flow model
labor market dynamics
establishments
administrative data
job and worker flows
JEL: 
E32
E24
J64
Document Type: 
Working Paper

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