Wage development has not deteriorated among those who switch jobs
Economic Commentaries, News Despite strong economic activity, total wage growth has been surprisingly subdued in recent years. Historically, people who switch jobs have on average had stronger wage development than those who have not done so. The wage premium for job-switchers has not deteriorated compared with previous periods of similar resource utilisation. This is the conclusion of the Economic Commentary “Who switches jobs and is the wage premium for switching jobs cyclically normal?”, which also analyses Swedish labour market flows.
The percentage of the workforce that switch jobs is linked to economic activity. It is more common to switch jobs when labour demand is high. People who switch jobs generally have stronger wage growth that year than those who do not do so. There is also a correlation between the size of the wage premium and the economic situation.
Currently, the majority of indicators point to high resource utilisation on the labour market. The proportion of the workforce switching jobs is also on a high level, but total wage growth has been subdued despite the strong economic situation. The analysis in this Economic Commentary indicates, however, that the wage premium for those who switch jobs has not deteriorated over time but is in line with the level it has been on during previous periods of similar resource utilisation.
By Caroline Flodberg, who is currently on leave of absence from the Riksbank’s Monetary Policy Department to work at the International Monetary Fund.
The Riksbank’s Economic Commentaries contain, for instance, short analyses and debate articles. The opinions expressed in Economic Commentaries are those of the authors and are not to be seen as the Riksbank’s view.