Reports on Economics from Federal Reserve Board Provide New Insights (Education and the Margins of Cyclical Adjustment In the Labour Market): Economics

2026 FEB 23 (NewsRx) -- By a News Reporter-Staff News Editor at Economics Daily Report -- Investigators discuss new findings in Economics. According to news originating from Washington, District of Columbia, by NewsRx editors, the research stated, “Allocative wages-the labour costs considered when deciding to form or dissolve a long-term employment relationship-are more sensitive to cyclical conditions for more educated workers. Specifically, college-educated workers’ allocative wages are highly pro-cyclical, while high school dropouts’ wages exhibit only moderate cyclicality.”

Funders for this research include Brookings Institution, Boston and Amherst Colleges, UNC-Chapel Hill, Banque de France.

Our news journalists obtained a quote from the research from Federal Reserve Board, “Further, as education increases, an increasing share of the sensitivity of allocative wages is driven by the persistent scarring effects of the cyclical position at the time of hiring on the wages associated with higher levels of tenure, amounting to more than a third of the overall sensitivity for the college educated. The greater job stability of the more educated-and therefore the exposure to scarring-contributes to these differences. In addition, more significant scarring at each horizon of tenure amplifies the effect.”

According to the news editors, the research concluded: “In service of documenting these facts, I develop new methods for inferring the sensitivity of labour costs to shocks when agents are forward-looking and wages may be intertemporally smoothed.”

This research has been peer-reviewed.

For more information on this research see: Education and the Margins of Cyclical Adjustment In the Labour Market. Review of Economic Studies, 2026. Review of Economic Studies can be contacted at: Oxford Univ Press, Great Clarendon St, Oxford OX2 6DP, England. (Oxford University Press - http://www.oup.com/; Review of Economic Studies - restud.oxfordjournals.org)

The news correspondents report that additional information may be obtained from Cynthia L. Doniger, Federal Reserve Board, Washington, DC 20551, United States.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1093/restud/rdag002. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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