Real wages over the business cycle: OECD evidence from the time and frequency domains

We study differences in the adjustment of aggregate real wages in the manufacturing sector over the
business cycle across OECD countries, combining results from different data and dynamic methods.
Summary measures of cyclicality show genuine cross-country heterogeneity even after controlling
for the impact of data and methods. We find that more open economies and countries with stronger
unions tend to have less pro-cyclical (or more counter-cyclical) wages. We also find a positive
correlation between the cyclicality of real wages and employment, suggesting that policy
complementarities may influence the adjustment of both quantities and prices in the labour market.