• Journal of Labour Economics
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• v.26 no.3
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• pp.77-114
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• 2003

Analyses of the special data sets constructed from the National Longitudinal Survey of Youth and the Panel Study of Income Dynamics reveal that, compared with an annual wage measure, survey week wages are significantly counter-cyclically biased due to selecting workers with strong labor market attachment. We also find that survey week wages are more counter-cyclically biased in high-wage industries than in low-wage industries, that is, inter-industry gaps of survey week wages are counter-cyclically biased. Unlike existing longitudinal studies, the current study concludes that real wages are much more procyclical in high-wage industries than in low-wage industries, which is attributed to our adoption of annual wages that is less subject to the selectivity bias. Our finding is consistent with the empirical regularity that real wages are much more procyclical for men than for women, as men are overrepresented in industries with greater real wage procyclicalities. Overall, current results do not support the predictions of segmented labor market theories for the cyclicality of real wages.

• Journal of Labour Economics
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• v.25 no.2
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• pp.1-32
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• 2002

This paper investigates how real wages adjust to regional and cyclical shocks in the Korean labor market. Major findings are as follows. First, like most longitudinal studies in this literature, we find that real wages are strongly procyclical and more procyclical for men than for women. Second, consistent with the theory prediction of efficiency wages, both permanent and transitory components of real wages are negatively correlated with the local unemployment rate. Third, when overall and local unemployment rates compete in a wage equation (our preferred specification), current wages are dominantly affected by the overall rate, and the effect of the local rate is rather small. This rejects the Blanchflower and Oswald's hypothesis that wages are primarily determined by local labor market conditions. Finally, no lagged effects on wages are detected in the overall or local unemployment rate.