Economics, Econometrics and Finance
4 years ago

Real wages shift from countercyclical to procyclical, impacting economic stability.

American Economic Review
Why Does the Cyclical Behavior of Real Wages Change Over Time?
Kevin X. D. Huang, Zheng Liu, Louis Phaneuf

Paper Summary

Real wages have changed over time, being a bit opposite during the interwar period and more in line with economic cycles after World War II. A model shows that this shift is due to how wages and prices interact with the structure of the economy.

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