How Cyclical Is the User Cost of Labor?-Reference-Cited by-同舟云学术

How Cyclical Is the User Cost of Labor?

Published:2024-05-01 Issue:2 Volume:38 Page:159-180
ISSN:0895-3309
Container-title:Journal of Economic Perspectives
language:en
Short-container-title:Journal of Economic Perspectives

Author:

Kudlyak Marianna¹

Affiliation:

1. Marianna Kudlyak is a Research Advisor (Economist and Bank Officer), Federal Reserve Bank of San Francisco, San Francisco, California. She is also a Visiting Fellow, Hoover Institution at Stanford University, Stanford, California; Research Fellow, Centre for Economic Policy Research (CEPR), London, United Kingdom; and Research Fellow, Institute of Labor Economics (IZA), Bonn, Germany. .

Abstract

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.

Publisher

American Economic Association

Link

https://pubs.aeaweb.org/doi/pdf/10.1257/jep.38.2.159

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