Reconciling the Divergence in Aggregate U.S. Wage Series

45 Pages Posted: 7 Mar 2016

See all articles by Julien Champagne

Julien Champagne

Government of Canada - Bank of Canada

Andre Kurmann

Drexel University

Jay Stewart

Bureau of Labor Statistics; IZA Institute of Labor Economics

Abstract

According to data from the Labor Productivity and Costs (LPC) program, average hourly real compensation in the United States has grown consistently over time and become markedly more volatile since the mid-1980s. By contrast, data from the Current Employment Statistics (CES) imply that average hourly real earnings has mostly stagnated and become substantially less volatile. We show that differences in earnings concept and differences in worker coverage account for the majority of this divergence in growth and volatility. The results have important implications for the appropriate choice of aggregate wage series for macroeconomic analysis.

Keywords: comparison of hourly earnings data, earnings trends, earnings volatility

JEL Classification: E01, E24, E30, J30

Suggested Citation

Champagne, Julien and Kurmann, Andre and Stewart, Jay, Reconciling the Divergence in Aggregate U.S. Wage Series. IZA Discussion Paper No. 9754, Available at SSRN: https://ssrn.com/abstract=2742542 or http://dx.doi.org/10.2139/ssrn.2742542

Julien Champagne (Contact Author)

Government of Canada - Bank of Canada

234 Wellington Street
Ontario, Ottawa K1A 0G9
Canada

Andre Kurmann

Drexel University ( email )

School of Economics
3141 Chestnut St
Philadelphia, PA 19104
United States

Jay Stewart

Bureau of Labor Statistics ( email )

2 Massachusetts Avenue, NE
Washington, DC 20212
United States

IZA Institute of Labor Economics

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

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