The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
Since the global financial crisis, US wage growth has been sluggish. Drawing on individual
earnings data from the 2000-15 Current Population Survey, I find that the drawn-out cyclical
labor market repair-likely owing to low entry wages of new workers-slowed down real
wage growth. There are, however, also signs of structural changes in the labor market
affecting wages: for full-time, full-employed workers, the Wage-Phillips curve-the
empirical relationship between wage growth and the unemployment rate-has become
horizontal after 2008. Similarly, job-turnover rates have continued to decline. Job-to-job
transitions-associated with higher wage growth-have slowed across all skill and age
groups and beyond what local labor market conditions would imply. This raises concerns about the allocative ability of the labor market to adjust to changing economic conditions.