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Reconciling the divergence in aggregate U.S. wage series
Journal article   Open access   Peer reviewed

Reconciling the divergence in aggregate U.S. wage series

Julien Champagne, André Kurmann and Jay Stewart
Labour economics, v 49, pp 27-41
Dec 2017
DOI: https://doi.org/10.1016/j.labeco.2017.08.002
Featured in Collection :   UN Sustainable Development Goals @ Drexel
url
https://economicdynamics.org/meetpapers/2014/paper_718.pdfView
Submitted Open Open Access (License Unspecified)

Abstract

Divergence in trend and volatility Irregular earnings Supplements Wages and salaries Worker coverage
•Three commonly used series of average hourly wages for the U.S. have diverged markedly over the past 40 years, both in trend growth and volatility.•The divergence between the wage series is due in large part to differences in earnings concept and worker coverage.•Employer-paid supplements and irregular earnings of high-income workers are more volatile than wages and have grown more rapidly, accounting for a large part of the divergences.•The differences have important implications for the appropriate choice of average hourly wage series for macroeconomic analysis. Average hourly wages from the Labor Productivity and Costs (LPC) program, the Current Population Survey (CPS) and the Current Employment Statistics (CES) survey have diverged, both in trend and volatility. Supplements and irregular earnings of high-income workers, included in the LPC but not in the two other datasets, have grown more rapidly and have become more volatile, accounting for most of the divergence between LPC and CPS earnings. The more restrictive worker coverage in the CES explains a large part of the divergence between CPS and CES earnings. The results have important implications for the choice of wage series in macroeconomic analysis.

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Economics
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