The Relative Power of Employment-to-Employment Reallocation and Unemployment Exits in Predicting Wage Growth

Published on 6 January 2017

We begin with a description of some basic
patterns found in the data. As in Moscarini
and Postel-Vinay (2016) we draw our data from
the SIPP 1996-2008 panels, covering 1996-2013
with few gaps. To refine the measurement of
EE transitions, we adopt the methodology and
results from Fujita, Moscarini and Postel-Vinay
(2017).

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

    Fabien Postel-Vinay
    Fabien Postel-Vinay

    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.

    Person graphic

    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)

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