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Women and the Phillips curve: do women’s and men’s labor market outcomes differentially affect real wage growth and inflation?

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  • Katharine Anderson
  • Lisa Barrow
  • Kristin Butcher

Abstract

During the economic expansion of the 1990s, the United States enjoyed both low inflation rates and low levels of unemployment. Juhn, Murphy, and Topel (2002) point out that the low unemployment rates for men in the 1990s were accompanied by historically high rates of non-employment suggesting that the 1990s economy was not as strong as the unemployment rate might indicate. We include women in the analysis and examine whether the Phillips curve relationships between real compensation growth, changes in inflation, and labor market slackness are the same for men and women and whether measures of “non- employment” better capture underlying economic activity, as suggested by Juhn, Murphy, and Topel’s analysis. From 1965 to 2002 the increase in women’s labor force participation more than offsets the decline for men, and low unemployment rates in the 1990s were accompanied by historically low overall non- employment rates. We find that women’s measures of labor market slackness do as well as men’s in explaining real compensation growth and changes in inflation after 1983. We also find some evidence that non-employment rates are more closely related to changes in inflation than other measures of labor market slackness; however, we do not find the same for real compensation growth.

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Bibliographic Info

Paper provided by Federal Reserve Bank of Chicago in its series Working Paper Series with number WP-03-22.

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Date of creation: 2003
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Handle: RePEc:fip:fedhwp:wp-03-22

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Related research

Keywords: Labor market ; Phillips curve ; Wages ; Inflation (Finance);

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  1. Daniel Aaronson & Daniel Sullivan, 2000. "Unemployment and wage growth: recent cross-state evidence," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q II, pages 41-54.
  2. Morten O. Ravn & Harald Uhlig, 2002. "On adjusting the Hodrick-Prescott filter for the frequency of observations," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 371-375.
  3. Chinhui Juhn & Kevin Murphy & Robert Topel, 2002. "Current Unemployment, Historically Contemplated," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 33(1), pages 79-136.
  4. Olivier Blanchard & Lawrence F. Katz, 1997. "What We Know and Do Not Know about the Natural Rate of Unemployment," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 51-72, Winter.
  5. Andrew Atkeson & Lee E. Ohanian., 2001. "Are Phillips curves useful for forecasting inflation?," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 2-11.
  6. Anne Morrison Piehl & Suzanne J. Cooper & Anthony A. Braga & David M. Kennedy, 1999. "Testing for Structural Breaks in the Evaluation of Programs," NBER Working Papers 7226, National Bureau of Economic Research, Inc.
  7. Joseph Stiglitz, 1997. "Reflections on the Natural Rate Hypothesis," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 3-10, Winter.
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