Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/245464 
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 9283
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We document substantial cross-sectional heterogeneity of German establishments' real wage cyclicality over the business cycle. While wages of the median establishment are moderately procyclical, 36 percent of establishments have countercyclical wages. We estimate a negative connection between establishments' wage cyclicality and their employment cyclicality, thereby providing a benchmark for quantitative macroeconomic models. We propose and calibrate a labor market flow model to match various empirical facts and to perform counterfactual exercises. If all establishments behaved as the most procyclical ones, labor market amplification would drop by one-third. If all followed Nash bargaining, it would drop by more than two-thirds.
Subjects: 
wage cyclicality
employment cyclicality
labor market flow model
labor market dynamics
establishments
administrative data
JEL: 
E32
E24
J64
Document Type: 
Working Paper
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