Real Wages and the Cycle: The View from the Frequency Domain

37 Pages Posted: 22 May 2001

See all articles by Robert A. Hart

Robert A. Hart

University of Stirling - Department of Economics; Institute for the Study of Labor (IZA)

Jim Malley

University of Glasgow - Department of Economics

Ulrich Woitek

University of Zurich

Date Written: July 2001

Abstract

In the time domain, the observed cyclical behavior of the real wage hides a range of economic influences that give rise to cycles of differing lengths and strengths. This may serve to produce a distorted picture of wage cyclicality. Here, we develop frequency domain methods that allow us decompose wages into cyclical components and to assess the relative contribution of each component to overall variation. These are discussed in relation to wages alone (the univariate case) and to wages in relation to production or employment-based measures of the cycle (multivariate). In the multivariate dimension, we derive methods for testing (i)lead-lag relationships and (ii) time dependency of lengths of cycles. We establish that real wages are strongly pro-cyclical and that the business cycle is the dominant associated influence.

Keywords: Real Wages, Frequency Domain, Univariate Measure, Multivariate Measures, Phase Shift, Business Cycle

JEL Classification: E32, J31

Suggested Citation

Hart, Robert A. and Malley, Jim and Woitek, Ulrich, Real Wages and the Cycle: The View from the Frequency Domain (July 2001). Available at SSRN: https://ssrn.com/abstract=268150 or http://dx.doi.org/10.2139/ssrn.268150

Robert A. Hart (Contact Author)

University of Stirling - Department of Economics ( email )

Stirling, Scotland FK9 4LA
United Kingdom
+44 1786 467 471 (Phone)
+44 1786 467 469 (Fax)

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Jim Malley

University of Glasgow - Department of Economics ( email )

Adam Smith Building
Glasgow, Scotland G12 8RT
United Kingdom
+44 141 330 4617 (Phone)
+44 141 330 4940 (Fax)

HOME PAGE: http://www.gla.ac.uk/economics/malley/

Ulrich Woitek

University of Zurich ( email )

Zürichbergstrasse 14
CH-8032 Zurich
Switzerland

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
136
Abstract Views
1,249
Rank
381,245
PlumX Metrics