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Wage Flexibility for Skilled and Unskilled Workers: New Evidence on the Norwegian Wage Curve

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  • Kåre Johansen

Abstract

Empirical evidence is provided in favour of a hypothesis that wages for unskilled workers are more responsive to unemployment than wages for skilled workers. The results imply vigorous wage responsiveness to low levels of unemployment for both groups, while the wage curves become almost entirely flat for unemployment rates above 1.7 percent. One interpretation of this result is that firms have strong incentives to increase wages in order to recruit and retain workers when unemployment is below some critical level. Since unemployed workers will certainly find work, the expected costs of a job loss are small, as are costs associated with an egalitarian wage policy. Copyright Fondazione Giacomo Brodolini and Blackwell Publishers Ltd 1999.

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Bibliographic Info

Article provided by CEIS in its journal Labour.

Volume (Year): 13 (1999)
Issue (Month): 2 (06)
Pages: 413-432

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Handle: RePEc:bla:labour:v:13:y:1999:i:2:p:413-432

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Cited by:
  1. Blanchflower, David G. & Oswald, Andrew J., 2005. "The Wage Curve Reloaded," IZA Discussion Papers 1665, Institute for the Study of Labor (IZA).
  2. Morrison, Philip S. & Papps, Kerry L. & Poot, Jacques, 2006. "Wages, employment, labour turnover and the accessibility of local labour markets," Labour Economics, Elsevier, vol. 13(5), pages 639-663, October.
  3. Ammermüller, Andreas & Kuckulenz, Anja & Zwick, Thomas, 2006. "Aggregate Unemployment Decreases Individual Returns to Education," ZEW Discussion Papers 06-34, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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