We study the cyclical comovement nominal wage growth (either monthly earnings or hourly wage rate) and labor market flows. We use microdata from the Survey of Income and Program Participation over 1996-2013 to purge composition effects in worker and job characteristics and to isolate the reallocative effect of Employer-to-Employer (EE) transitions. We find an "EE wage Phillips curve": wage inflation comoves positively with EE as strongly as with the employment rate. This correlation holds for job stayers; we interpret the EE rate as a measure of labor demand. We find no analogous evidence for the job-finding rate from unemployment.
Authors
CPP Co-Director, IFS Research Director
Fabien is an IFS Research Director and a Professor of Economics at UCL. His work’s focus is on labour markets.
Giuseppe Moscarini
Journal article details
- Publisher
- American Economic Review
- Issue
- January 2017
Suggested citation
Moscarini, G and Postel-Vinay, F. (2017). 'The Relative Power of Employment-to-Employment Reallocation and Unemployment Exits in Predicting Wage Growth' (2017)
More from IFS
Understand this issue
Big firm, little firm: are differences between companies driving inequality and holding back growth?
30 August 2023
Don’t cheer end of earnings squeeze: there is more pain to come
19 June 2023
The economics of immigration
8 June 2023
Policy analysis
How has the NLW affected pay differentials within firms?
16 February 2024
Progression of nurses within the NHS
12 April 2024
Is there really an NHS productivity crisis?
17 November 2023
Academic research
Labour market inequality and the changing life cycle profile of male and female wages
15 April 2024
Social skills and the individual wage growth of less educated workers
27 March 2024
The menopause "penalty"
18 March 2024