TY - BOOK ID - 85289994 TI - Employment Time and the Cyclicality of Earnings Growth AU - Hoffmann, Eran. AU - Malacrino, Davide. PY - 2018 SN - 1484356683 1484356659 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Wages KW - Compensation KW - Departmental salaries KW - Earnings KW - Pay KW - Remuneration KW - Salaries KW - Wage-fund KW - Wage rates KW - Working class KW - Income KW - Labor costs KW - Compensation management KW - Cost and standard of living KW - Prices KW - Labor KW - Macroeconomics KW - Employment KW - Unemployment KW - Intergenerational Income Distribution KW - Aggregate Human Capital KW - Aggregate Labor Productivity KW - Economic Growth of Open Economies KW - Economic Development: Human Resources KW - Human Development KW - Income Distribution KW - Migration KW - Wages, Compensation, and Labor Costs: General KW - Demand and Supply of Labor: General KW - Labor Economics: General KW - Unemployment: Models, Duration, Incidence, and Job Search KW - Labour KW - income economics KW - Labor markets KW - Economic theory KW - Labor market KW - Labor economics KW - Italy KW - Income economics UR - https://www.unicat.be/uniCat?func=search&query=sysid:85289994 AB - We study how the distribution of earnings growth evolves over the business cycle in Italy. We distinguish between two sources of annual earnings growth: changes in employment time (number of weeks of employment within a year) and changes in weekly earnings. Changes in employment time generate the tails of the earnings growth distribution, and account for the increased dispersion and negative skewness in the distribution of earnings growth in recessions. In contrast, the cross-sectional distribution of weekly earnings growth is symmetric and stable over the cycle. Thus, models that rely on cyclical idiosyncratic risk, should separately account for the employment margin in their earnings process to avoid erroneous conclusions. We propose such a process, based on the combination of simple employment and wage processes with few parameters, and show that it captures the procyclical skewness in changes in earnings growth and other important features of its distribution. ER -