present labor market conditions. Furthermore, we revisit recent findings of greater wage cyclicality of new hires. Overall, we … cyclical than those of existing workers. We argue that much of the excess wage cyclicality of new hires discussed by the …

) and an on-the-job search model (Hagedorn and Manovskii, 2013) for the wage formation of different worker types over the …), we find that previous evidence for the excess wage cyclicality of job changers can be entirely explained by cyclical …-employee matches, we also find no excess wage cyclicality for new hires from unemployment - the key worker type's wage for …

wages are rigid. We explore whether this explanation is consistent with the data. We show that the wage of newly hired … workers, unlike the aggregate wage, is volatile and responds one-to-one to changes in labor productivity. In order to … jobs. This form of wage rigidity does not affect job creation and thus cannot explain the unemployment volatility puzzle. …

employment matches. To address both concerns, we estimate cyclicality in labor's user cost exploiting the long-run wage in a … recession affects user cost: It lowers the new-hire wage; it lowers wages going forward in the match; but it also results in …

We introduce dynamic incentive contracts into a model of unemployment dynamics and present three results. First, wage …-order equivalent in an economy with flexible incentive pay and without bargaining, vis-a-vis an economy with rigid wages. Second, wage …% of wage cyclicality in the data arises from incentives. A standard model without incentives calibrated to weakly …

through the analysis of individual wage sequences. These suggest that the downwardly rigid wage sequences implied by implicit …

. We show that firms were able to respond to the Great Recession with substantial real wage cuts and by recruiting more …

Wage rigidity is an important explanation for unemployment fluctuations. In benchmark models wages for new hires are … information, to measure the wage for new hires. We show that our measure of the wage for new hires is rigid downward and flexible …