Pay Cycles: Individual and Aggregate Effects of Paycheck Frequency

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This paper shows that the frequency at which workers are paid affects the within-month patterns of both household expenditure and aggregate economic activity. To identify causal effects, I exploit two novel sources of exogenous variation in pay frequency in the US. First, using an as-good-as-random...

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Autor principal: Berniell, Inés
Formato: Articulo Documento de trabajo
Lenguaje:Inglés
Publicado: 2018
Materias:
Ciencias Económicas
pay frequency
within-month business cycles
congestion
Acceso en línea:http://sedici.unlp.edu.ar/handle/10915/65384
http://www.cedlas.econo.unlp.edu.ar/wp/wp-content/uploads/doc_cedlas221.pdf
Aporte de:
SEDICI (UNLP) de Universidad Nacional de La Plata
id I19-R120-10915-65384
record_format dspace
institution Universidad Nacional de La Plata
institution_str I-19
repository_str R-120
collection SEDICI (UNLP)
language Inglés
topic Ciencias Económicas
pay frequency
within-month business cycles
congestion
spellingShingle Ciencias Económicas
pay frequency
within-month business cycles
congestion
Berniell, Inés
Pay Cycles: Individual and Aggregate Effects of Paycheck Frequency
topic_facet Ciencias Económicas
pay frequency
within-month business cycles
congestion
description This paper shows that the frequency at which workers are paid affects the within-month patterns of both household expenditure and aggregate economic activity. To identify causal effects, I exploit two novel sources of exogenous variation in pay frequency in the US. First, using an as-good-as-random variation in the pay frequency of retired couples, I show that those who are paid more frequently have smoother expenditure paths. Second, I take advantage of crossstate variation in labor laws to compare patterns of economic activity in states in which the frequency with which wages are paid differs. I document that low pay frequencies lead to within-month business cycles when many workers are paid on the same dates, which in turn generates costly congestion in sectors with capacity constraints. These findings have important policy implications for contexts where firms and workers do not internalize such congestion externalities as this situation leads to market equilibria with suboptimally low pay frequencies and few paydays.
format Articulo
Documento de trabajo
author Berniell, Inés
author_facet Berniell, Inés
author_sort Berniell, Inés
title Pay Cycles: Individual and Aggregate Effects of Paycheck Frequency
title_short Pay Cycles: Individual and Aggregate Effects of Paycheck Frequency
title_full Pay Cycles: Individual and Aggregate Effects of Paycheck Frequency
title_fullStr Pay Cycles: Individual and Aggregate Effects of Paycheck Frequency
title_full_unstemmed Pay Cycles: Individual and Aggregate Effects of Paycheck Frequency
title_sort pay cycles: individual and aggregate effects of paycheck frequency
publishDate 2018
url http://sedici.unlp.edu.ar/handle/10915/65384
http://www.cedlas.econo.unlp.edu.ar/wp/wp-content/uploads/doc_cedlas221.pdf
work_keys_str_mv AT berniellines paycyclesindividualandaggregateeffectsofpaycheckfrequency
bdutipo_str Repositorios
_version_ 1764820480558104577

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