Data and Code for: Sticky Wages on the Layoff Margin

Principal Investigator(s):  View help for Principal Investigator(s) Steven J. Davis, Hoover Institution; Pawel M. Krolikowski, Federal Reserve Bank of Cleveland

Version:  View help for Version V1

Name File Type Size Last Modified
  data 09/30/2024 09:13:PM
  figures 09/30/2024 09:15:PM
  logs 09/30/2024 09:15:PM
  programs 10/03/2024 07:11:AM
  survey_invitations_and_questionnaires 09/30/2024 09:16:PM
  tables 09/30/2024 09:16:PM
README.txt text/plain 5.9 KB 10/30/2024 02:02:AM

Project Citation: 

Davis, Steven J., and Krolikowski, Pawel M. Data and Code for: Sticky Wages on the Layoff Margin. Nashville, TN: American Economic Association [publisher], 2025. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2025-01-07. https://doi.org/10.3886/E209426V1

Project Description

Summary:  View help for Summary We design and field an innovative survey of unemployment insurance (UI) recipients that yields new insights about wage stickiness on the layoff margin. A majority of UI recipients express a willingness to accept wage cuts of 5-10 percent to save their jobs, and one third would accept a 25 percent pay cut.  Yet worker-employer discussions about cuts in pay, benefits or hours in lieu of layoffs are exceedingly rare. When asked why employers don't propose job-saving pay cuts, four-in-ten UI recipients don't know. Sixteen percent say cuts would undermine morale or lead the best workers to quit, and 36 percent don't think wage cuts would save their jobs. For lost union jobs, 45 percent say contracts prevent wage cuts. Among those on permanent layoff who reject our hypothetical pay cuts, half say they have better outside options, and 38 percent regard the proposed pay cut as insulting. About one-fourth of the layoffs in our sample violate the condition for bilaterally efficient separations in leading theories of job separations, frictional unemployment, and job ladders. We draw on our findings and other evidence to assess theories of wage stickiness and its role in layoffs.
Funding Sources:  View help for Funding Sources University of Chicago. Booth School of Business; University of Chicago, Becker Friedman Institute; Federal Reserve Bank of Cleveland

Scope of Project

Subject Terms:  View help for Subject Terms wage rigidity; sticky wages; layoffs; unemployment insurance; survey of job losers; worker perceptions
JEL Classification:  View help for JEL Classification
      E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
      J63 Labor Turnover; Vacancies; Layoffs
      J65 Unemployment Insurance; Severance Pay; Plant Closings
Geographic Coverage:  View help for Geographic Coverage United States, Illinois
Time Period(s):  View help for Time Period(s) 6/2018 – 7/2019


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V1 [2025-01-07]

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