Munich Personal RePEc Archive

Labor disruption costs and real wages cyclicality

Cervini-Plá, María and Silva, José I. and López-Villavicencio, Antonia (2012): Labor disruption costs and real wages cyclicality.

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Abstract

In this paper, we propose a matching and search model with adjustment costs in the form of labor disruption charges that can generate counter-cyclical real wages. Empirically, we use a measure of wage cyclicality based on the generalized impulse response function of real wages to a shock in a cycle measure. We provide evidence that wages in the United States are counter-cyclical during the first few quarters. The calibration and simulated results of the model match remarkably well the counter-cyclicality obtained from our empirical model.

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