The effect of unemployment, aggregate wages, and spatial contiguity on local wages: An investigation with German district level data
AbstractDespite spatial rigidity of collectively negotiated wages the local unemployment rate is found to have a significant negative impact on wages. This impact is shown to be consistent with both the wage-curve hypothesis and modern Phillips-curve modelling. Spatial contiguity effects are found in wages and unemployment and their neglect leads to an underestimation of the effect of local unemployment. Yet, the impact of local unemployment on wages turns out to be quite low as compared to studies for other countries. Some support for the hypothesis that negotiated wages suppress spatial wage flexibility comes from the finding that the impact of local unemployment on local wages decreases with its extent.
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Bibliographic InfoArticle provided by Springer in its journal Papers in Regional Science.
Volume (Year): 78 (1999)
Issue (Month): 1 ()
Note: Received: 13 December 1996
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Web page: http://link.springer.de/link/service/journals/10110/index.htm
Find related papers by JEL classification:
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
- R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
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