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Divergence in Post-Pandemic Earnings Growth: Evidence from Micro Data
Author: Sophia Chen and Do Lee
Series:
IMF Working Papers
Volume/Issue:
Volume 2024: Issue 222
Language:
English
Publication Date:
11 Oct 2024
DOI:
https://doi.org/10.5089/9798400291814.001
ISBN:
9798400291814
ISSN:
1018-5941
Pages:
53
Keywords:
Earnings; Wage; Labor Market Conditions; Pandemic; Earnings growth; micro data; labor market competition; IMF working paper No. 2024/222; employer-employee dataset; Wages; Labor markets; Labor force; Unemployment; North America; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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We use a comprehensive employer-employee dataset to examine post-pandemic worker earnings in the US. Our findings reveal that earnings grew faster in counties that were less severely impacted at the onset of the pandemic. This divergence in growth was both substantial and persistent, particularly for lower-paid and nonmanagerial workers, as well as for those in smaller firms. Both wage increases and additional hours contributed to this earnings growth. This evidence aligns with a job-ladder framework, where labor market competition leads to a dispersion of earnings across counties but compresses earnings among workers in counties with strong labor markets. Our findings provide a microfoundation for the wage Phillips curve and have direct implications for stabilization policies.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund