Do Job-to-Job Transitions Drive Wage Fluctuations Over the Business Cycle? | Zendy

Fatih Karahan | Zendy; Ryan Michaels | Zendy; Benjamin Pugsley | Zendy; Ayşegül Şahin | Zendy; Rachel Schuh | Zendy

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Do Job-to-Job Transitions Drive Wage Fluctuations Over the Business Cycle?

Author(s) -

Fatih Karahan,

Ryan Michaels,

Benjamin Pugsley,

Ayşegül Şahin,

Rachel Schuh

Publication year - 2017

Publication title -

american economic review

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 16.936

H-Index - 297

eISSN - 1944-7981

pISSN - 0002-8282

DOI - 10.1257/aer.p20171076

Subject(s) - economics , wage , explanatory power , business cycle , variation (astronomy) , job creation , robustness (evolution) , econometrics , wage growth , labour economics , biochemistry , physics , chemistry , astrophysics , keynesian economics , gene , philosophy , epistemology

We investigate the importance of job-to-job (JJ) transitions for cyclical wage dynamics. By exploiting cross-state variation, we find that wage growth is tightly linked to variation in the JJ transition probability, and conditional on this, the job finding probability of the unemployed has no explanatory power. We investigate the robustness of our results to several caveats and find the result to hold. Finally, we discuss the implications of our findings for competing theories of wage dynamics.

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