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Macro midterm spring

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Aggregate data is bad to use because it averages everything out and the results are that real wage is cyclical or moderately pro-cyclical. It ignores how lower skilled workers are more cyclical versus high skilled workers. Study done by Solon, Barksy, and Parker use panel data which predicts that real wages are 2 times as pro cyclical on individual level compared to aggregate.

Author: Daniel Ortega


Empirical Evidence of cyclical nature of real wages

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