Divergence in Post-Pandemic Earnings Growth: Evidence from Micro Data

IMF Working Papers, October 11, 2024

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Earnings grew faster in counties that were less severely impacted at the onset of the pandemic.
The divergence in earnings growth was substantial and persistent.
Divergence was particularly pronounced for:
- lower-paid workers,
- nonmanagerial workers,
- workers in smaller firms.
Both wage increases and additional hours contributed to the observed earnings growth.
Evidence is consistent with a job-ladder framework:
- labor market competition drives dispersion of earnings across counties,
- labor markets that are strong compress earnings among workers within those counties.
Findings provide a microfoundation for the wage Phillips curve and have direct implications for stabilization policies.

Uses a comprehensive employer-employee dataset to examine post-pandemic worker earnings in the US.
Subject areas: Labor, Labor force, Labor markets, Unemployment, Wages.
Keywords include: Earnings, Earnings growth, employer-employee dataset, Global, IMF working paper No. 2024/222, Labor force, labor market competition, Labor Market Conditions, Labor markets, micro data, North America, Pandemic, Unemployment, Wage, Wages.