Nominal Wage Adjustments during the Pandemic Recession
AEA Papers and Proceedings
vol. 111,
May 2021
(pp. 258-62)
Abstract
In this paper, we show that the pandemic recession has led to frequent cuts in nominal wages. Within three months in 2020, as many wage cuts had occurred as occurred throughout the Great Recession. Unlike employment declines, wage cuts were concentrated at the top of the wage distribution. However, these cuts have been relatively short lived, particularly among high earners. Finally, wage cuts have been concentrated in firms that have seen large employment declines. Wage cuts appear not to be a substitute for cutting employment, at least when the shock to labor demand is this large.Citation
Grigsby, John, Erik Hurst, Ahu Yildirmaz, and Yulia Zhestkova. 2021. "Nominal Wage Adjustments during the Pandemic Recession." AEA Papers and Proceedings, 111: 258-62. DOI: 10.1257/pandp.20211056Additional Materials
JEL Classification
- G01 Financial Crises
- J31 Wage Level and Structure; Wage Differentials
- E32 Business Fluctuations; Cycles
- E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
- J23 Labor Demand
- I12 Health Behavior