BIBLIOGRAPHY

Publications, working papers, and other research using data resources from IPUMS.

Full Citation

Title: Waiting for the Paycheck: Individual and Aggregate Effects of Wage Payment Frequency

Citation Type: Miscellaneous

Publication Year: 2014

Abstract: In the United States workers receive their salaries weekly, biweekly, semimonthly or monthly, depending on job characteristics and state-level regulation. In this paper I show that the frequency of pay affects the within-month patterns of household expenditures and aggregate economic activity. To identify causal effects, I exploit exogenous variations in pay frequency in the US, both at household and state levels. First, I take advantage of a source of random variation in the pay frequency of retired couples. Monthly pensions are paid in different weeks depending on recipients day of birth, which leads to otherwise similar retired couples having, by chance, one or two paydays every month. I find that households with two paydays have smoother expenditure paths along the month. Second, I compare the pattern of economic activity in states with different pay frequency requirements, exploiting state variation in legislation that originates in laws enacted at the beginning of the 20th century. States requiring weekly payments exhibit a smoother within-month path of aggregate economic activity, measured by air pollution, traffic accidents and information from time use surveys. On the other hand, in states with laws requiring a lower pay frequency the economic activity significantly increases during pay weeks, which may lead to costly congestion in sectors with capacity constraints (roads, hospitals, restaurants, etc.). These results have important policy implications in a context where firms and workers do not internalize these congestion costs.

Url: http://www.cemfi.es/~berniell/JMP_InesBerniell.pdf

User Submitted?: No

Authors: Berniell, Ines

Publisher: Centro de Estudios Monetarios y Financieros

Data Collections: IPUMS Time Use - ATUS

Topics: Labor Force and Occupational Structure, Other

Countries:

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