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The Dynamics of Income Shares and the Wage Curve-Phillips Curve Controversy

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  • Madsen, Jakob B

    (Brunel University)

Abstract

This paper argues that the Phillips curve-wage curve controversy cannot be settled within the conventional testing frameworks and suggests an alternative test, which builds on the model of Blanchard and Katz (1997). Using long macro data for the OECD countries, the evidence gives very strong support for the Phillips curve and indicates that wage behaviour is no different among the OECD countries. This implies that adverse supply shocks, which push wages in excess of the full employment equilibrium, have only temporary effects on real product wages and therefore cannot explain the persistently high unemployment in most European countries.

Suggested Citation

  • Madsen, Jakob B, 2002. "The Dynamics of Income Shares and the Wage Curve-Phillips Curve Controversy," Royal Economic Society Annual Conference 2002 133, Royal Economic Society.
    • Handle: RePEc:ecj:ac2002:133
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    Cited by:

    1. García-Mainar , Inmaculada & Montuenga-Gómez , Víctor M., 2012. "Wage dynamics in Spain: evidence from individual data (1994-2001)," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 24, pages 41-58.
    2. Victor Montuenga & Inmaculada Garcia, 2011. "The wage dynamics in Spain: evidence from individual data," ERSA conference papers ersa11p585, European Regional Science Association.

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