Evidence on wage cyclicality shows job changers have more procyclical wages
than job stayers. Previous work argued this arises because workers gain gr
eater access to jobs in sectors such as manufacturing that offer high wages
. This article argues that workers who switch jobs in booms enter temporary
jobs with unemployment risk and are merely compensated for subsequent loss
es. I demonstrate that the two explanations can be distinguished using the
relationship between unemployment insurance and wage cyclicality among job
changers. The evidence supports the compensation hypothesis; that is, that
job changers might not experience real gains from higher-paying jobs in boo
ms.