The Structural Shift in the Cyclicality of the Labor Income Share for the United States.
[Job Market Paper] [Last Update: 03.23.2018]
Abstract: There is a consensus that the U.S. labor share is countercyclical, reflecting the existence of insurance against unemployment risk. I document a structural change in the cyclicality of the U.S. labor share, which has become procyclical during the last three decades. I show empirically that the new procyclicality of the labor share is due to the vanishing procyclicality of labor productivity, to the increase in the volatility of real wages and to the imperfect positive comovement between real wages and average labor productivity. Theoretically, the shift in the cyclicality of the labor share is a new challenge for a large class of macroeconomic models embedded with labor hoarding and wage rigidity mechanisms. Finally, I present evidence suggesting that the shift in the cyclicality of the U.S. labor share is not due to changes in industrial composition, contrary to recent cross-country evidence.
The Public Sector Wage Premium: An Occupational Approach.
[Draft] [Last Update: 09.09.2014]
In the aftermath of the great recession, fiscal policy appeared in the headlines of most western countries at the top of the governments’ agenda to recover the economy. Austerity policies are now the rule, not the exception. After all the efforts that were required to get out of the recession, it is only natural that the public sector payroll has been consistently under the public opinion’s spotlight. This article proposes to review the empirical evidence on the wage dynamics for both the private and public sectors of the economy. I argue that more relevance must be attributed to the occupational composition in the determination of the aggregate public sector wage differential in the economy. I contribute to the literature by providing three new robust empirical facts relating the occupational heterogeneity with the determination of the public sector wage differential. The first fact shows a negative relationship between the public sector wage differential and the private sector hourly wage across occupations. The second provides suggestive evidence for the existence of a public sector wage differential polarization. The third fact shows that the public sector wage differential is affected by the occupational employment composition across sectors and by the structural movements in occupational categories that are occurring from 1990 to the present, the so-called “job polarization”. To test the robustness of these results I execute a battery of Oaxaca-Blinder counterfactual decompositions for the average worker.