This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. Journals
  3. American Economic Review
  4. September 2003
  5. Interpreting Aggregate Wage Growth: The Role of Labor Market Participation

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Interpreting Aggregate Wage Growth: The Role of Labor Market Participation

  • Richard Blundell
  • Howard Reed
  • Thomas M. Stoker
American Economic Review
vol. 93, no. 4, September 2003
(pp. 1114–1131)
Download Full Text PDF

Abstract

A new and easily implementable framework for the empirical analysis of the relationship between aggregate and individual wages is developed. Aggregate real wages are shown to contain three important bias terms: one associated with the dispersion of individual wages, a second deriving from compositional changes in the (selected) sample of workers, and a third reflecting the distribution of working hours. Their importance for interpreting the path of aggregate wages and of the returns to education for recent experience in Britain is highlighted. A close correspondence between the estimated biases and the patterns of differences shown by aggregate wages is established. (JEL C34, E24, J31)

Citation

Blundell, Richard, Howard Reed, and Thomas M. Stoker. 2003. "Interpreting Aggregate Wage Growth: The Role of Labor Market Participation." American Economic Review, 93 (4): 1114–1131. DOI: 10.1257/000282803769206223

Additional Materials

JEL Classification

  • E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital
  • J31 Wage Level and Structure; Wage Differentials