Abstract
In this paper, I study how the wages of job-stayers respond within the year to changes in firm sales, using quarterly matched employer–employee data from Hungary. The analysis compares firm-specific and sectoral shocks with an instrumental variables strategy based on leave-one-out sectoral sales growth. Three main results emerge. Wages are almost fully insured against idiosyncratic firm shocks, with elasticities around 2%. In contrast, wages co-move strongly with aggregate shocks: the elasticity with respect to sectoral sales changes is about 0.07, and even higher in manufacturing, construction and machine-operator jobs. These results show that aggregate shocks pass through even on a short, quarterly time horizon, while firms provide insurance against firm-specific shocks. This implies that changing macroeconomic or monetary conditions can affect wages even at the quarterly level.