How Cyclical Is the User Cost of Labor?

In employment relationships, a wage is an installment payment on an implicit long-term agreement between a worker and a firm. The price of labor that impacts firm's hiring decisions, instead, reflects the hiring wage as well as the impact of economic conditions at the time of hiring on future wages. Measured by the labor's user cost, the price of labor is substantially more pro-cyclical than the new-hire wage or the average wage. The strong procyclicality of the price of labor calls for other forces for cyclical labor demand to explain employment fluctuations.

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Year of publication:	2024
Authors:	Kudlyak, Marianna
Publisher:	Bonn : Institute of Labor Economics (IZA)
Subject:	user cost of labor \| wages \| cyclicality \| wage rigidity \| unemployment

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Series:	IZA Discussion Papers ; 16888
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	1885310188 [GVK] RePEc:iza:izadps:dp16888 [RePEc]
Classification:	E24 - Employment; Unemployment; Wages ; E32 - Business Fluctuations; Cycles ; J30 - Wages, Compensation, and Labor Costs. General ; J41 - Contracts: Specific Human Capital, Matching Models, Efficiency Wage Models, and Internal Labor Markets ; J63 - Turnover; Vacancies; Layoffs ; J64 - Unemployment: Models, Duration, Incidence, and Job Search
Source:	EconStor

Persistent link: https://www.econbiz.de/10014533978