Wage cyclicality and the wage curve under the microscope

"Using large data sets from the German employment and unemployment register 1985-2004, we investigate aggregate wage cyclicality and the wage curve for establishment stayers and movers. We find that movers' wage responses to aggregate unemployment rate changes exceed these of stayers by about 30-40 percent. A new finding is that the increments of movers over stayer responses to regional unemployment shocks are considerably greater and amount to about 150 percent. This difference in differences (responses to regional compared with aggregate cycles and responses of movers compared with stayers) can be explained by the importance of centralized wage bargaining in Germany." (Author's abstract, IAB-Doku) ((en))