J3 - Wages, Compensation, and Labor Costs
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Wage Growth in Canada and the United States: Factors Behind Recent Weakness
This note examines the relatively subdued pace of wage growth in Canada since the commodity price decline in 2014 and assesses whether the weakness is attributable to cyclical (e.g., labour market slack) or structural factors (e.g., resource reallocation and demographic change). -
Downward Nominal Wage Rigidity, Inflation and Unemployment: New Evidence Using Micro‐Level Data
Recent evidence suggests that the extent of downward nominal wage rigidity (DNWR) in the Canadian labour market has risen following the 2008–09 recession (see Brouillette, Kostyshyna and Kyui 2016). -
Constrained Efficiency with Adverse Selection and Directed Search
Constrained efficient allocation (CE) is characterized in a model of adverse selection and directed search (Guerrieri, Shimer, and Wright (2010)). CE is defined to be the allocation that maximizes welfare, the ex-ante utility of all agents, subject to the frictions of the environment. -
Downward Nominal Wage Rigidity in Canada: Evidence from Micro- Level Data
We assess the importance of downward nominal wage rigidity (DNWR) in Canada using both firm- and worker-level microdata. In particular, we analyze employer-level administrative data from the Major Wage Settlements (MWS) and household-based survey data from the Survey of Labour Income Dynamics (SLID). -
Un examen plus approfondi des pressions salariales au Canada
In this note, we provide a brief outline of the recent developments in wage measures in Canada. We then assess whether wage growth is consistent with its fundamentals. -
May 16, 2016
The Micro and Macro of Downward Nominal Wage Rigidity
The article examines the extent of downward nominal wage rigidity in Canada and its implications for monetary policy. The authors ask whether its existence is a sufficient argument for a higher inflation target if concerns about the effective lower bound are adequately addressed. -
Capital Structure, Pay Structure and Job Termination
We develop a model to analyze the link between financial leverage, worker pay structure and the risk of job termination. Contrary to the conventional view, we show that even in the absence of any agency problem among workers, variable pay can be optimal despite workers being risk averse and firms risk neutral. -
Reconciling the Differences in Aggregate U.S. Wage Series
Average hourly real wage series from the Labor Productivity and Costs (LPC) program and the Current Employment Statistics (CES) program have evolved very differently over the past decades. -
The Carrot and the Stick: The Business Cycle Implications of Incentive Pay in the Labor Search Model
This paper considers a real business cycle model with labor search frictions where two types of incentive pay are explicitly introduced following the insights from the micro literature on performance pay (e.g. Lazear, 1986).