Downward Rigidity in the Wage for New Hires

Hazell and Taska use wages posted on online job vacancies — matched to job titles and establishment identifiers from Burning Glass Technologies — to measure the wage for new hires at the job level (same job title and establishment) over 2010Q1–2020Q2. They find that this measure of the wage for new hires is rigid downward and flexible upward. At the job level, the nominal posted wage changes infrequently — on average once every 5–6 quarters — and conditional on changing, is four times more likely to rise than to fall. In the cyclical dimension, job-level posted wages rise strongly when state unemployment falls but do not fall when state unemployment rises; real wages exhibit the same asymmetric pattern. These results do not appear in the average wage for new hires (which aggregates across all job types), because time-varying job composition inflates the variance of average wages and raises standard errors roughly twentyfold relative to job-level regressions — explaining why prior work using worker-level survey data found no evidence of downward rigidity. A Heckman (1979) selection correction for firms’ selection into vacancy posting suggests that selection bias in the job-level regression is moderate. The findings provide direct empirical support for models in which downward wage rigidity for new hires — specifically at the job level — amplifies unemployment fluctuations and generates asymmetric unemployment dynamics.

Dynamics of the Long-Term Housing Yield: Evidence from Natural Experiments

Each month a fraction of UK property leases are extended by 90 years or more, creating thousands of natural experiments in which the same property’s rent and capital value are revealed simultaneously. This paper uses these lease extensions — and Massachusetts and Cambridge rent-control removals as a second identification strategy — to estimate the expected long-term housing yield (annual rent-to-price ratio) and decompose its dynamics into rent-growth expectations and discount-rate components. The central finding is that housing yield movements are dominated by discount-rate shocks: variation in required returns on housing explains the overwhelming majority of yield variance, while expected rent growth contributes less than 10 percent. Housing booms are therefore primarily driven by falling required returns, not by rational expectations of higher future rents. The yield responds to real long-term interest rates with a slope significantly below one, consistent with a non-pecuniary convenience yield on housing that is not fully displaced by interest rate changes.

Jonathon Hazell | Macro Paper Warehouse

Downward Rigidity in the Wage for New Hires

Dynamics of the Long-Term Housing Yield: Evidence from Natural Experiments